<PAGE> 1
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. ________)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14(a)-11(c) or Section
240.14a-12
Uranium Resources, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(i)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:__/
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(4) Proposed maximum aggregate value of transaction:
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__/ Set forth the amount on which the filing fee is calculated and state how
it was determined.
/X/ Check box if any part of the fee is offset as provided by the Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
$125.00
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(2) Form, Schedule or Registration No.:
Preliminary Proxy Material
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(3) Filing Party:
Uranium Resources, Inc.
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(4) Date Filed:
October 17, 1995
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<PAGE> 2
URANIUM RESOURCES, INC.
12750 MERIT DRIVE, SUITE 1020
DALLAS, TEXAS 75251
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 19, 1995
To the Stockholders of
URANIUM RESOURCES, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Uranium
Resources, Inc., a Delaware corporation (the "Company"), will be held at the
office of Baker & Hostetler, 303 East 17th Avenue, Suite 1100, Denver, Colorado
80203, on Tuesday, December 19, 1995, at 8:00 a.m., local time, for the
following purposes:
1. To elect four (4) directors of the Company to serve until the next
annual meeting of stockholders or until their respective successors shall be
elected and qualified. George R. Ireland and James B. Tompkins, two of the
nominees, are the designees of Lindner Investments (on behalf of its Lindner
Bulwark Fund) and Lindner Dividend Fund, Inc. (together hereinafter referred to
as "Lindner"). Pursuant to an agreement with Lindner, discussed in the
accompanying Proxy Statement, the Company has agreed to nominate two designees
of Lindner;
2. To consider and vote upon a proposal to approve the adoption of the
Uranium Resources, Inc. 1995 Stock Incentive Plan;
3. To consider and vote upon a proposal to approve the issuance of up to
3,000,000 shares of Common Stock issuable upon conversion of 6.5% secured
convertible notes and exercise of warrants currently held by Lindner. If the
notes are fully converted and the warrants fully exercised, Lindner, together
with Lindner Fund, Inc. (hereinafter the "Lindner Group") would own
beneficially 34.8% of the outstanding Common Stock of the Company. The Lindner
Group may be deemed a controlling stockholder of the Company;
4. To consider and vote upon a proposal to approve the grant of options
to purchase 100,000 shares of the Company's Common Stock to each of George R.
Ireland and James B. Tompkins;
5. To consider and vote upon a proposal to approve the grant of options
to purchase 100,000 shares of the Company's Common Stock to Leland O. Erdahl;
6. To consider and vote upon a proposal to approve an application for an
order of the British Columbia Securities Commission (the "BCSC") that the
Company no longer be required to make periodic reports to the BCSC;
7. To consider and vote upon a proposal to ratify the selection of Arthur
Andersen, LLP, independent accountants, as independent auditors for the Company
for the fiscal year ending December 31, 1995; and
<PAGE> 3
8. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
Only stockholders of record at the close of business on November 14, 1995,
are entitled to notice of and to vote at the Meeting or any adjournment
thereof.
STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE MEETING, YOU ARE REQUESTED TO SIGN
AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE SO THAT YOUR SHARES MAY
BE VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT THE PRESENCE OF A
QUORUM MAY BE ASSURED. THE GIVING OF SUCH PROXY WILL NOT AFFECT YOUR RIGHT TO
VOTE IN PERSON, SHOULD YOU LATER DECIDE TO ATTEND THE MEETING. PLEASE DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. YOUR
VOTE IS IMPORTANT.
By Order of the Board of Directors
____________________________________
Laura A. Greig, Assistant Secretary
DALLAS, TEXAS
November 16, 1995
<PAGE> 4
URANIUM RESOURCES, INC.
12750 MERIT DRIVE, SUITE 1020
DALLAS, TEXAS 75251
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 19, 1995
This Proxy Statement is furnished to stockholders of Uranium Resources,
Inc., a Delaware corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
Annual Meeting of Stockholders (the "Meeting") to be held at the office of
Baker & Hostetler, 303 East 17th Avenue, Suite 1100, Denver, Colorado 80203, on
Tuesday, December 19, 1995, at 8:00 a.m., local time, for the purposes set
forth in the accompanying Notice of Annual Meeting of Stockholders. The
approximate date on which this Proxy Statement and the enclosed Proxy will
first be sent to stockholders is November 16, 1995.
ACTION TO BE TAKEN AT THE MEETING
Shares represented by a properly executed Proxy, unless the stockholder
otherwise instructs in the Proxy, will be voted (i) for the election of the
four individuals named below under the caption Election of Directors as
directors of the Company; (ii) for the approval of the adoption of the
Company's 1995 Stock Incentive Plan (the "Stock Incentive Plan"); (iii) for
approval of the issuance of up to an aggregate of 3,000,000 shares of Common
Stock (the "Stock Issue Transaction") upon conversion of certain notes (the
"Notes") and the exercise of certain warrants held by Lindner Investments, a
Massachusetts business trust (on behalf of its Lindner Bulwark Fund) ("Lindner
Investments") and Lindner Dividend Fund, Inc., a Missouri corporation ("Lindner
Dividend" and together with Lindner Investments "Lindner"); (iv) for approval
of the grant of options to purchase 100,000 shares of the Company's Common
Stock to each of George R. Ireland and James B. Tompkins (the "Ireland and
Tompkins Option Grants"); (v) for the approval of the grant of options to
purchase 100,000 shares of the Company's Common Stock to Leland O. Erdahl (the
"Erdahl Option Grant") (vi) for the approval of an application for an order of
the British Columbia Securities Commission (the "BCSC") that the Company no
longer be required to make periodic reports to the BCSC (the "BCSC
Application"); (vii) for the ratification of the selection of Arthur Andersen,
LLP, independent accountants, as independent auditors of the Company for the
fiscal year ending December 31, 1995; and (viii) at the discretion of the proxy
holders on any other matter or business that may be properly presented at the
Meeting or any adjournment thereof. Where a stockholder properly executes a
Proxy and gives instructions on how his shares are to be voted, the shares will
be voted in accordance with those instructions.
<PAGE> 5
If the notes are fully converted and the warrants fully exercised, the
Lindner Group would own beneficially 34.8% of the outstanding Common Stock of
the Company. The Lindner Group may be deemed a controlling stockholder of the
Company.
A Proxy may be revoked at any time by a stockholder before it is exercised
by giving written notice to the Secretary of the Company, or by signing and
delivering a Proxy which is dated later, or, if the stockholder attends the
Meeting in person, by either notice of revocation to the inspectors of election
at the Meeting or by voting at the Meeting.
The only matters that management intends to present at the Meeting are the
seven matters referenced in subparagraphs (i) through (vii) above. If any
other matter or business is properly presented at the Meeting, the proxy
holders will vote upon it in accordance with their best judgment.
Three current directors and nominees for election to the Board of
Directors, George R. Ireland, James B. Tompkins and Leland O. Erdahl, have a
direct pecuniary interest in the proposal to approve the Company's grant, to
each of them, of options to purchase 100,000 shares of Common Stock. See
Proposal to Approve the Ireland and Tompkins Option Grants and Proposal to
Approve the Erdahl Option Grant. George R. Ireland and James B. Tompkins, two
of the nominees, are the designees of Lindner. Pursuant to an agreement with
Lindner, discussed in the accompanying Proxy Statement, the Company has agreed
to nominate two designees of Lindner.
VOTING SECURITIES
The record date for the Meeting is November 14, 1995. Only stockholders
of record at the close of business on November 14, 1995, will be entitled to
vote at the Meeting. At the close of business on that date, there were issued
and outstanding [8,145,698] shares of the Company's Common Stock entitled to
one vote per share. In the election of directors, cumulative voting is not
allowed. A majority of the outstanding Common Stock, present in person or by
Proxy and entitled to vote, will constitute a quorum for the transaction of
business at the Meeting. Under Delaware law and the Company's Bylaws, if a
quorum is present at the Meeting: (i) to be elected a director, each nominee
must receive a plurality of the votes of the shares present in person or by
Proxy at the Meeting and entitled to vote on the matter, and (ii) the
affirmative vote of the majority of shares present in person or by Proxy at the
Meeting and entitled to vote on the matter is required to (a) approve the Stock
Incentive Plan, (b) approve the Stock Issue Transaction, (c) approve the
Ireland and Tompkins Option Grants, (d) approve the Erdahl Option Grant, (e)
approve the BCSC Application, (f) ratify the selection of Arthur Anderson, LLP,
as independent auditors of the Company for the fiscal year ending December 31,
1995, and (g) approve any other matter submitted to a vote of stockholders at
the Meeting. In the election of directors, any action other than a vote for a
nominee will have the practical effect of voting against the nominee.
Abstention from voting on any matter presented at the Meeting, will have
2
<PAGE> 6
the practical effect of voting against any such matter since it is one less
vote for approval. Broker non-votes on any matter will not be considered
"shares present" for voting purposes.
BENEFICIAL OWNERSHIP OF THE COMPANY'S COMMON STOCK
The following table sets forth, as of August 16, 1995, certain information
regarding persons known by the Company to be the beneficial owner of more than
5% of the outstanding shares of the Company's Common Stock. Shown separately
in the second table below is certain information regarding the beneficial
ownership of the Company's Common Stock by (i) each director and nominee for
director of the Company, (ii) each of the executive officers named in the
Summary Compensation Table set forth below under the caption Executive
Compensation, and (iii) all directors and executive officers as a group.
3
<PAGE> 7
PRINCIPAL STOCKHOLDERS
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) CLASS(2)
---------------- ----------------------- --------
<S> <C> <C>
Oren L. Benton 1,252,882(3) 15.4%
1515 Arapahoe Street
Three Park Central, Suite 1000
Denver, CO 80202
Barry R. Feirstein 600,000 7.4%
Feirstein Capital Management Corp.
767 Third Avenue
28th Floor
New York, NY 10017
Margaret McKnight Trust 410,245(4) 5.0%
215 Llano
Portland, TX 78374
Lindner Fund, Inc. 821,525(5) 10.1%
7711 Carndelet Avenue
Suite 700
Clayton, MO 63105
Lindner Dividend Fund, Inc. 2,306,000(5)(6) 22.2%
7711 Carndelet Avenue
Suite 700
Clayton, MO 63105
Lindner Bulwark Fund, Inc. 750,000(5)(7) 8.4%
7711 Carndelet Avenue
Suite 700
Clayton, MO 63105
Ryback Management Corporation 407,000(8) 5.0%
7711 Carndelet Avenue
Suite 700
Clayton, MO 63105
</TABLE>
- -------------------------------------------
4
<PAGE> 8
(1) Each person has sole voting and investment power with respect to the
shares listed, unless otherwise indicated. Beneficial ownership includes
shares over which the indicated beneficial owner exercises voting and/or
investment power.
(2) The shares owned by each person, and the shares included in the total
number of shares outstanding, have been adjusted, and the percentages
owned have been computed, in accordance with Rule 13d-3(d)(1) under the
Securities Exchange Act of 1934. Shares subject to options or warrants
currently exercisable or exercisable within 60 days are deemed outstanding
for computing the percentage ownership of the person holding such options
or warrants, but not deemed outstanding for computing the percentage
ownership of any other person.
(3) Includes 736,842 shares owned by Concord International Mining and
Management Corp. of which Mr. Benton is the sole stockholder.
(4) Includes 14,745 shares held by the Margaret McKnight Trust and 395,500
shares held in the name of Margaret McKnight as trustee for the Margaret
McKnight Trust.
(5) Lindner Fund, Inc., Lindner Dividend Fund, Inc., and Lindner Bulwark Fund,
Inc. (the "Lindner Group") are members of the same family of mutual funds
and may be deemed collectively as a controlling stockholder of the
Company. The Lindner Group is managed by Ryback Management Corporation
("Ryback"), an investment adviser. Ryback has discretionary authority
over the shares owned beneficially by the Lindner Group, including the
power to vote and dispose of such shares.
(6) Includes 56,000 outstanding shares owned beneficially by Lindner Dividend
Fund, Inc., 1,125,000 shares issuable upon conversion of the Notes and
1,125,000 shares issuable upon exercise of the Warrants.
(7) Includes 375,000 shares issuable upon conversion of the Notes and 375,000
issuable upon exercise of the Warrants.
(8) Ryback manages the accounts of third parties that are not affiliated with
the Lindner Group. Such parties own beneficially 407,000 outstanding
shares over which Ryback has discretionary authority to vote and dispose
of such shares.
5
<PAGE> 9
MANAGEMENT
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER OWNERSHIP(1) CLASS(2)
---------------- ------------ --------
<S> <C> <C>
Raymond G. Larson 757,928(3) 9.3%
1063 Red Oaks Loop, N.E.
Albuquerque, NM 87122
William M. McKnight, Jr. 453,934(3)(4) 5.5%
5656 South Staples
Suite 250, LB 8
Corpus Christi, TX 78411
Richard F. Clement, Jr. 194,963(3)(5) 2.4%
41A Hickory Hill
Argyle, TX 76226
Wallace M. Mays 50,000(6) *
Three Park Central
Suite 1100
1515 Arapahoe Street
Denver, CO 80202
Paul K. Willmott 5,000(7) *
56 Osborn Hill Road
Sandy Hook, CT 06482
Joe H. Card 0(8) *
5180 Roswell Road N.W.
South Building, Suite 2
Atlanta, GA 30342
Leland O. Erdahl 106,500(9) 1.3%
8046 MacKenzie Court
Las Vegas, NV 89129
George R. Ireland 100,000(10) 1.2%
1700 Lincoln Street
Suite 1930
Denver, CO 80203
James B. Tompkins 100,000(11) 1.2%
Tompkins & Company
11673 East Lake Place
Englewood, CO 80111
All executive officers and directors as a 1,768,325(12) 20.7%
group (9 persons)
</TABLE>
- --------------------------------------------------
* Less than 1%.
6
<PAGE> 10
(1) Each person has sole voting and investment power with respect to the
shares listed, unless otherwise indicated. Beneficial ownership includes
shares over which the indicated beneficial owner exercises voting and/or
investment power.
(2) The shares owned by each person, and the shares included in the total
number of shares outstanding, have been adjusted, and the percentages
owned have been computed, in accordance with Rule 13d-3(d)(1) under the
Securities Exchange Act of 1934. Shares subject to options currently
exercisable or exercisable within 60 days are deemed outstanding for
computing the percentage ownership of the person holding such options, but
not deemed outstanding for computing the percentage ownership of any other
person.
(3) Messrs. Larson, McKnight and Clement resigned their positions as executive
officers of the Company effective July 7, 1994, although they continued in
the employ of the Company, and Mr. McKnight was elected Vice President of
Operations on February 24, 1995. Messrs. Larson and McKnight resigned as
directors of the Company on August 8, 1994.
(4) Includes 412,684 shares held in the William M. McKnight, Jr. Trust. Mr.
McKnight, Margaret McKnight, his former spouse, William McKnight, III and
Charles G. McKnight are trustees for that trust. Mr. McKnight exercises
sole fiduciary power with respect to the shares held by the trust,
including sole voting and dispositive power. Also includes 41,250 shares
that may be obtained by Mr. McKnight, through the exercise of stock
options which are currently exercisable or will become exercisable within
60 days. Such number does not include 14,745 shares held in the Margaret
McKnight Trust or 395,500 shares held in the name of Margaret McKnight as
trustee for the Margaret McKnight Trust as to which Mr. McKnight disclaims
beneficial ownership. Mr. McKnight, Margaret McKnight, William McKnight,
III and Charles G. McKnight are trustees for that trust. Margaret
McKnight exercises sole fiduciary power with respect to the shares held by
the Margaret McKnight Trust, including sole voting and disposition power.
In addition, such number does not include 13,750 shares that may be
obtained by Mr. McKnight through the exercise of stock options exercisable
more than 60 days from the date hereof.
(5) Includes 18,562 shares that may be obtained by Mr. Clement through the
exercise of stock options which are currently exercisable or will become
exercisable within 60 days. Does not include 6,188 shares that may be
obtained through the exercise of stock options exercisable more than 60
days from the date hereof.
(6) Mr. Mays resigned as Chairman of the Board and Chief Executive Officer
effective as of July 31, 1995. Pursuant to his resignation, options held
by Mr. Mays to purchase 200,000 shares of the Company's Common Stock,
which were not vested at the time of his resignation, expired. In
connection with Mr. Mays' resignation, the Company granted Mr. Mays
options to purchase 50,000 shares of Common Stock at an exercise price of
$4.75 per share.
7
<PAGE> 11
(7) Includes 4,000 shares that may be obtained by Mr. Willmott through the
exercise of stock options which are currently exercisable. Does not
include 216,000 shares that may be obtained by Mr. Willmott through the
exercise of stock options exercisable more than 60 days from the date
hereof.
(8) Does not include 18,750 shares that may be obtained by Mr. Card through
the exercise of stock options exercisable more than 60 days from the date
hereof.
(9) Includes (i) 5,000 shares that may be obtained by Mr. Erdahl through the
exercise of stock options which are currently exercisable and (ii) 100,000
shares that may be obtained through the exercise of stock options granted
to Mr. Erdahl by the Board subject to stockholder approval. Does not
include 16,000 shares that may be obtained by Mr. Erdahl through the
exercise of stock options exercisable more than 60 days from the date
hereof.
(10) Includes 100,000 shares that may be obtained by Mr. Ireland through the
exercise of stock options granted to Mr. Ireland by the Board subject to
stockholder approval. Does not include 20,000 shares that may be obtained
by Mr. Ireland through the exercise of stock options exercisable more
than 60 days from the date hereof.
(11) Includes 100,000 shares that may be obtained by Mr. Tompkins through the
exercise of stock options granted to Mr. Tompkins by the Board subject to
stockholder approval. Does not include 20,000 shares that may be obtained
by Mr. Tompkins through the exercise of stock options exercisable more
than 60 days from the date hereof.
(12) Includes 418,812 shares that may be obtained through the exercise of stock
options which are currently exercisable or will become exercisable within
60 days.
CHANGE IN CONTROL
On July 7, 1994, Messrs. Raymond G. Larson, Harry L. Anthony, IV, William
M. McKnight, Jr. and Richard Clement, Jr. resigned as directors and officers
of the Company. The remaining two directors, Joe B. Huffstutler and Louis G.
Munin, appointed Oren L. Benton, Wallace M. Mays, Paul K. Willmott and Leland
O. Erdahl to the Company's Board of Directors. Mr. Benton served as Chairman
of the Board from January 10, 1995 until his resignation from the Board on
February 7, 1995. At various times between September 1993 and March 30, 1995,
Mr. Benton or entities controlled by Mr. Benton acquired, from certain
officers, directors and employees of the Company, options to purchase a
majority of the then outstanding shares of Common Stock and proxies to vote
those shares. Such options and proxies expired on March 30, 1995. The options
expired unexercised. See Election of Directors--Arrangements Regarding
Election of Directors and Certain Relationships and Related
Transactions--Acquisition of Shares by Mr. Benton.
8
<PAGE> 12
ELECTION OF DIRECTORS
(PROPOSAL 1 ON PROXY CARD)
Under the Company's Bylaws and pursuant to a resolution of the Board of
Directors, the Board of Directors has fixed the size of the Board at four.
Directors are elected to serve until the next annual meeting of stockholders or
until their successors are elected and qualified. The Company's Board of
Directors is not divided into classes; therefore, all four directors are to be
elected at the Meeting.
Unless authority is withheld, it is intended that the shares represented
by a properly executed Proxy will be voted for the election of all of the
nominees (Paul K. Willmott, Leland O. Erdahl, George R. Ireland and James B.
Tompkins) as directors. The nominees are currently all the members of the
Company's Board of Directors. If these nominees are unable to serve for any
reason, such Proxy will be voted for such persons as shall be designated by the
Board of Directors to replace such nominees. The Board of Directors has no
reason to expect that these nominees will be unable to serve.
The following table sets forth certain information concerning the
individuals nominated for election as directors of the Company:
<TABLE>
<CAPTION>
POSITIONS AND OFFICES
NAME AGE WITH THE COMPANY
---- --- --------------------
<S> <C> <C>
Paul K. Willmott 55 Chairman, Chief Executive Officer, President, and Director
Leland O. Erdahl 66 Director
George R. Ireland 39 Director
James B. Tompkins 38 Director
</TABLE>
NOMINEES FOR DIRECTOR
PAUL K. WILLMOTT has served as a director of the Company since August
1994, as President of the Company since February 1995, as Chief Financial and
Accounting Officer from April 12, 1995 through September 25, 1995 and as
Chairman of the Board and Chief Executive Officer effective July 31, 1995. Mr.
Willmott retired from Union Carbide Corporation ("Union Carbide") where he was
involved during the last 25 years in the finance and operation of Union
Carbide's world-wide mining and metals business. Most recently, Mr. Willmott
was President of UMETCO Minerals Corporation, a wholly-owned subsidiary of
Union Carbide, from 1987 to 1991, where he was responsible for Union Carbide's
Uranium and Vanadium businesses. From January 1993 until February 1995, Mr.
Willmott was engaged by the Concord Mining Unit, which is owned or controlled
by Oren L. Benton ("CMU"), as a senior vice president.
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<PAGE> 13
In this capacity, he was primarily involved in the acquisition of UMETCO
Minerals Corporation's Uranium and Vanadium operating assets by EFN. Mr.
Willmott graduated from Michigan Technological University with a Bachelor of
Science degree in Mining in 1964 and a Bachelor of Science Degree in
Engineering Administration in 1967. He has been an active member of the
American Institute of Mining Engineers, the Canadian Institute of Mining
Engineers and a number of state professional organizations.
LELAND O. ERDAHL has served as a director of the Company since July 11,
1994. Mr. Erdahl previously served as President and Chief Executive Officer
for Stolar, Inc. from 1986 to 1991. Stolar was a high-tech company involved in
the radio wave imaging of geologic media and underground radio transmission for
voice and data. He was also President and CEO of Albuquerque Uranium
Corporation, a Uranium mining company, from 1987 to 1991. He is a Certified
Public Accountant and is a graduate from the College of Santa Fe. He is
currently a director of Hecla Mining Company, Freeport McMoRan Copper and Gold
Inc., Canyon Resources Corporation, Original Sixteen to One Mine, Inc., and a
trustee for a group of John Hancock Mutual Funds. He is also a director of
Santa Fe Ingredients Company of California, Inc. and Santa Fe Ingredients
Company, Inc., both private food processing companies.
GEORGE R. IRELAND has served as a director since May 26, 1995. Mr.
Ireland is a analyst for and a partner in the D.M. Knott Limited Partnership, a
private investment partnership. Mr. Ireland specializes in investing in
securities of natural resource and other basic industrial companies, both
domestically and abroad. From 1987 to 1991, he was a Vice President of Fulcrum
Management, Inc., which was the manager of the VenturesTrident Limited
Partnerships, venture capital funds dedicated to investing in the mining
industry, and Senior Vice President and Chief Financial Officer of MinVed Gold
Corporation, a company in which the VenturesTrident funds had a significant
investment. Mr. Ireland graduated from the University of Michigan with degrees
in Geology and Resource Economics. He also attended the Graduate School of
Business Administration of New York University. Mr. Ireland is a director of
Merrill & Ring, Inc., a private land and timber holding company in the state of
Washington. Mr. Ireland acted as a consultant to Ryback Management Corporation
and performed due diligence on the Company in connection with Ryback's loan of
$6 million to the Company on behalf of members of the Lindner Group discussed
elsewhere in this Proxy Statement. Mr. Ireland is not otherwise affiliated
with the Lindner Group or Ryback.
JAMES B. TOMPKINS is a registered investment advisor and provides
independent research to institutional investors through Tompkins & Company.
From 1988 until 1990, Mr. Tompkins acted as a sole proprietor of Tompkins &
Company, advising creditors of companies in bankruptcy as to the value of
claims and realizing proceeds on those claims. In that capacity, Mr. Tompkins
acted as a registered investment advisor. Between October 1990 and April 1993,
Mr. Tompkins was employed by Columbia Savings as a bond manager where he was
responsible for real estate loan workouts and asset disposition. He is an
attorney and a Chartered Financial Analyst. Mr. Tompkins graduated from the
University of Alabama in 1979 and received his Juris Doctor from the University
of Alabama School of Law in 1983. Mr. Tompkins acted as a consultant to Ryback
Management Corporation and performed due diligence on the Company
10
<PAGE> 14
in connection with Ryback's loan of $6 million to the Company on behalf of
members of the Lindner Group discussed elsewhere in this Proxy Statement. Mr.
Tompkins is not otherwise affiliated with the Lindner Group or Ryback.
ARRANGEMENTS REGARDING ELECTION OF DIRECTORS
Prior to July 7, 1994 there were six members of the Board of Directors:
Raymond G. Larson, Harry L. Anthony, IV, William M. McKnight, Jr., Richard F.
Clement, Jr., Joe B. Huffstutler and Louis G. Munin. In connection with the
involvement of Oren L. Benton as an investor in the Company and in anticipation
of the restructuring of the Citibank loans which occurred on August 19, 1994
(See Certain Relationships and Related Transactions), on July 7, 1994 Messrs.
Larson, Anthony, McKnight, and Clement resigned as directors and officers of
the Company.
At the request of Mr. Benton, Wallace M. Mays, Paul K. Willmott and Leland
O. Erdahl were appointed to the Board to fill the vacancies created by the
foregoing resignations. At the request of Mr. Benton, at various times after
July 7, 1994 other individuals (Mr. Larson from July 11, 1994 to August 8,
1994, William McKnight from July 11, 1994 to August 8, 1994 and Wayne D. Fowler
from August 8, 1994 to October 17, 1994), were elected to the Board and served
on the Board for short periods. By the end of 1994, the Board members
consisted of the individuals named in the first sentence of this paragraph and
Joe B. Huffstutler. Mr. Huffstutler resigned from the Board on January 17,
1995.
On January 10, 1995, at the request of Mr. Benton, Mr. Benton was
appointed to the Board and elected Chairman and Chief Executive Officer of the
Company. He resigned from those positions on February 7, 1995. Between July
7, 1994 and March 30, 1995, Mr. Benton controlled a majority of the Common
Stock of the Company through various mechanisms described under Certain
Relationships and Related Transactions. On March 30, 1995, all such
arrangements terminated.
On May 25, 1995, George R. Ireland and James B. Tompkins were appointed to
the Board of Directors following the closing of the Stock Issue Transaction.
In connection with the Stock Issue Transaction, the Company has agreed to
nominate two individuals designated by Lindner for election to the Board.
Messrs. Ireland and Tompkins are Lindner's designees.
Mr. Mays resigned from the Company's Board of Directors effective as of
July 31, 1995.
LEGAL PROCEEDINGS
On July 12, 1995, the Company filed a lawsuit in the federal district
court in Colorado against Professional Bank, a Colorado chartered bank
("ProBank"). The Company believes that ProBank is owned or controlled by Oren
L. Benton, the former Chairman of the Company's
11
<PAGE> 15
Board of Directors. In the action styled Uranium Resources, Inc. v.
Professional Bank, the Company alleges that ProBank transferred $1,080,000,
without the Company's authorization, from the Company's account at ProBank to
the accounts maintained at ProBank of various entities and an individual
affiliated with Mr. Benton. The Company has recovered $300,000 of the total
and is seeking to recover the balance from ProBank in the lawsuit.
OTHER EXECUTIVE OFFICERS
The following table sets forth certain information concerning executive
officers who are not also directors of the Company:
<TABLE>
<CAPTION>
POSITIONS AND OFFICES
NAME AGE WITH THE COMPANY
---- --- ---------------------
<S> <C> <C>
William M. McKnight, Jr. 59 Vice President - Operations
Joe H. Card 42 Senior Vice President - Marketing
Thomas H. Ehrlich 35 Vice President and Chief Financial Officer
</TABLE>
The following sets forth certain information concerning the business
experience of the foregoing executive officers during the past five years.
WILLIAM M. MCKNIGHT, JR. joined the Company in March 1978 and served as
the Company's Executive Vice President, Chief Operating Officer and Director
until August 1994. From August 1994 to February 1995, he directed the
Company's operations in South Texas and New Mexico and on February 24, 1995, he
was appointed Vice President of Operations for the Company. Mr. McKnight
received a B.S. in Geology from Centenary College in 1959 and a M.S. in
Sedimentary Geology from Florida State University in 1961.
JOE H. CARD joined the Company as Vice President - Marketing in March
1989. In February 1993 he was promoted to Senior Vice President - Marketing.
Previously, he spent four years with UG U.S.A., Inc., a U.S. marketing
subsidiary of a major German mining company, most recently as Marketing
Manager. His responsibilities were related to the entire Uranium fuel cycle,
primarily in dealing with U.S. nuclear utilities customers. Prior to his work
at UG U.S.A., Inc., Mr. Card spent five years with Mitsubishi International
Corporation as marketing manager. He earned a B.B.A. degree in Finance from
the University of Georgia in 1975 and an M.B.A. from Georgia State University
in 1978.
THOMAS H. EHRLICH, a certified public accountant, rejoined the Company in
September, 1995 as Vice President and Chief Financial Officer. Immediately
prior to that, Mr. Ehrlich spent nine months as a Division Controller with
Affiliated Computer Services, Inc., an information technology services provider
in Dallas, Texas. Prior to that, he joined the Company in November 1987 as
Controller-Public Reporting and was promoted to Controller and Chief
12
<PAGE> 16
Accounting Officer in February 1990. In February 1993, Mr. Ehrlich assumed the
additional duties of Vice President and Secretary of the Company. Prior to
joining the Company, he spent four years with Deloitte Haskins & Sells and
worked primarily with clients that were publicly held companies. Prior to his
work at Deloitte Haskins & Sells, he spent three years in various accounting
duties at Enserch Exploration, Inc., an oil and gas company in Dallas, Texas.
Mr. Ehrlich received his B.S. B.A. degree in Accounting from Bryant College in
1981.
The officers of the Company hold office until their successors are
appointed by the Board of Directors. All officers of the Company are employed
on a full-time basis. There is no family relationship between any director and
executive officer of the Company.
BOARD AND COMMITTEE MEETINGS
The Board of Directors held 13 formal meetings during the year ended
December 31, 1994. Each director attended all of the meetings, except for
Louis G. Munin, who did not attend the August 8, 1994 meeting. In addition to
those meetings, certain actions were taken by unanimous written consent of the
Board of Directors. The Company's officers have made a practice of keeping
directors informed of corporate activities by personal meetings and telephone
discussions and (as indicated above) directors ratify or authorize certain
Company actions through unanimous written consent actions.
The Company established a Compensation Committee in August 1994. Leland
O. Erdahl, George R. Ireland and James B. Tompkins are the current members of
both the Audit and Compensation Committees. The Audit Committee's principal
functions are to meet with the Company's independent auditors to review the
financial statements contained in the Annual Report, to review the Company's
systems of internal controls and to report to the Board of Directors thereon.
The Compensation Committee's function is to determine the compensation of
executive officers and to set guidelines for compensation for the employees of
the Company.
During 1994, the Audit Committee held two formal meetings and the
Compensation Committee held no formal meetings. The Audit Committee met in
April 1995 with the Company's auditors to review the 1994 fiscal year audit.
The Compensation Committee was established after 1994 executive compensation
was set and so did not meet in 1994.
At present, the Company has no nominating, executive, or similar
committees.
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to annual
and long-term compensation for services in all capacities for the years ended
December 31, 1994, 1993 and 1992 paid to the Company's Chief Executive Officers
and certain other executive officers of the Company.
13
<PAGE> 17
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
OTHER ANNUAL SECURITIES ALL OTHER
NAME AND PRINCIPAL COMPENSATION(1) UNDERLYING COMPENSATION(2)
POSITION YEAR SALARY ($) ($) OPTIONS (#) ($)
------------------------ ---- ---------- ------------------ ----------- ------------------
<S> <C> <C> <C> <C> <C>
Raymond G. Larson 1994 $112,066 $ 957 -- $ 2,897
Chairman, President & 1993 199,373 333 -- 1,837
Chief Executive Officer(3) 1992 180,631 9,396 55,000 5,041
Wallace M. Mays 1994 $ 78,725 -- 100,000 --
Chairman, President & 1993 -- -- -- --
Chief Executive Officer(4) 1992 -- -- -- --
Joe H. Card 1994 $120,441 $36,617 -- --
Senior Vice President - 1993 124,760 3,254 -- --
Marketing 1992 102,569 1,369 75,000 --
William M. McKnight, Jr. 1994 $190,306 $ 168 -- $3,549
Director, Executive Vice 1993 199,373 450 -- 1,753
President and Chief 1992 181,527 2,117 55,000 5,041
Operating Officer(3)
Richard F. Clement, Jr. 1994 $120,744 $1,766 -- $2,310
Director & Senior Vice 1993 127,157 1,550 -- 1,155
President-Exploration(3) 1992 113,273 2,142 24,750 3,169
</TABLE>
- --------------------------------------------------
(1) Represents amounts paid out for out-of-pocket medical and dental expenses
under the Company's Supplemental Health Care Plan and for Mr. Card
includes $33,808, constituting the difference between the fair market
value of the shares of Common Stock on the date of exercise of certain
stock options ($92,608) and the exercise price of $2.94 per share of
Common Stock.
(2) Represents contributions made by the Company under the Company's 401(k)
Profit Sharing Plan (see "401(k) Profit Sharing Plan" below).
(3) Messrs. Larson, McKnight and Clement resigned as officers and directors of
the Company on July 7, 1994. On July 11, 1994 Messrs. Larson and McKnight
were reappointed to the Board and subsequently resigned as directors on
August 8, 1994.
(4) Mr. Mays was elected President and Chief Executive Officer on July 11,
1994 and on August 8, 1994 was elected Chairman of the Board. Mr. Mays
compensation for 1994 was not paid directly by the Company. This amount
was paid pursuant to an employment agreement between Mr. Mays and Concord
Services, Inc. which was reimbursed by the Company for such amounts. Mr.
Mays resigned as Chairman of the Board and Chief Executive Officer
effective July 31, 1995.
14
<PAGE> 18
SUPPLEMENTAL HEALTH CARE PLAN
The Company has adopted a health care plan (the "Supplemental Plan") for
the officers of the Company and certain of the employees of the Company who are
also stockholders, which supplements the standard health care plan available to
all eligible employees of the Company (the "Standard Plan"). The Supplemental
Plan pays directly to the participant all out-of-pocket medical and dental
expenses not covered under the Standard Plan, including deductibles and
co-insurance amounts. Additionally, the Supplemental Plan provides to each
participant $100,000 of accidental death and dismemberment insurance protection
and a world wide medical assistance benefit. Each participant in the
Supplemental Plan may receive a maximum annual benefit of $50,000 or $100,000,
at the Company's option. The Company pays an annual premium under the
Supplemental Plan equal to $210 per participant plus 9% of claims paid. There
are currently ten officers and employees covered by the Supplemental Plan.
401(K) PROFIT SHARING PLAN
The Company maintains a defined contribution profit sharing plan for
employees of the Company (the "401(k)") that is administered by a committee of
trustees appointed by the Company. All Company employees are eligible to
participate upon the completion of six months of employment, subject to minimum
age requirements. Each year the Company makes a contribution to the 401(k) out
of its current or accumulated net profits (as defined) in an amount determined
by the Board of Directors but not exceeding 15% of the total compensation paid
or accrued to participants during such fiscal year. The Company's
contributions are allocated to participants in amounts equal to 25% (or a
higher percentage, determined at the Company's discretion) of the participants'
contributions, up to 4% of each participant's gross pay. For the plan year
ended July 31, 1994 the Company contributed amounts equal to 50% of the
participant's contributions, up to 4% of gross pay. For the plan year ended
July 31, 1993, the Company contributed amounts equal to 25% of the
participants' contribution, up to 4% of gross pay. For the plan year ended
July 31, 1992, the Company contributed amounts equal to 100% of the
participants' contributions, up to 4% of gross pay. Participants become 20%
vested in their Company contribution account for each year of service until
full vesting occurs upon the completion of five years of service.
Distributions are made upon retirement, death or disability in a lump sum or in
installments.
STOCK OPTION PLANS
The Company maintains a stock option plan for officers, directors and key
employees of the Company (the "Employees' Plan"). The Plan authorized grants
of non-qualified options to purchase up to an aggregate of 850,000 shares of
Common Stock. The Employees' Stock Option Committee of the Board of Directors
is responsible for the administration of the Employees' Plan and has the full
authority, subject to the provisions of the plan, to determine
15
<PAGE> 19
to whom and when to grant options and the number of shares of Common Stock
covered by each grant. As of August 16, 1995, a total of 413,452 shares are
reserved for issuance upon exercise of options granted under the Employees'
Plan and 230,252 shares were reserved for exercise upon the future grant of
options under the Employee's Plan.
On October 11, 1995, the Board decided to discontinue grants under the
Employees' Plan, subject to stockholder approval of the Company's 1995 Stock
Incentive Plan.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information with respect to options
granted to the executive officer named in the Summary Compensation Table in the
fiscal year ended December 31, 1994.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
-------------------------------------- -----------------------
PERCENT OF
TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO EXERCISE
UNDERLYING EMPLOYEES OR
OPTIONS IN FISCAL BASE PRICE EXPIRATION
NAME GRANTED (#) YEAR ($/SH) DATE 5% ($) 10% ($)
---------- ----------- ----------- ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Wallace M. Mays(1) 100,000 100% $4.25 08/10/04 $637,500 $850,000
</TABLE>
- --------------------------------------------------
(1) Mr. Mays resigned as Chairman of the Board and Chief Executive Officer
effective July 31, 1995. All such options expired unexercised. In
connection with his resignation, the Company granted Mr. Mays options to
purchase 50,000 shares of Common Stock at an exercise price of $4.75 per
share.
EXERCISE OF STOCK OPTIONS AND YEAR-END VALUE
The following sets forth information with respect to each exercise of
stock options during the fiscal year ended December 31, 1994 and the year-end
value of unexercised options held by each of the executive officers named in
the Summary Compensation Table.
16
<PAGE> 20
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS AT FISCAL
AT FISCAL YEAR END YEAR-END(1)
(#) ($)
SHARES ACQUIRED VALUE ------------------- -----------------
ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) ($) UNEXERCISABLE UNEXERCISABLE
-------------- ----------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Raymond G. Larson 27,500/27,500 $115,225/$115,225
Wallace M. Mays(2) 0/100,000 0/288,000
Joe H. Card 20,000 $33,808 17,500/37,500 73,325/157,125
William M. McKnight, Jr. 27,500/27,500 115,225/115,225
Richard F. Clement, Jr. 12,375/12,375 51,851/51,851
</TABLE>
- --------------------------------------------------
(1) Based on the closing price on the NASDAQ-NMS on December 30, 1994 ($7.13)
less the grant price of the option of $2.94 ($4.25 for Wallace M. Mays).
(2) Mr. Mays resigned as Chairman of the Board and Chief Executive Officer
effective July 31, 1995. All such options expired unexercised. In
connection with his resignation, the Company granted Mr. Mays options to
purchase 50,000 shares of Common Stock at an exercise price of $4.75 per
share.
DIRECTOR COMPENSATION
Under the Company's Directors' Stock Option Plan ("Directors' Plan"), each
new non-employee director elected or appointed to the Board of Directors for
the first time shall be granted an option to purchase 20,000 shares of Common
Stock as of the date of such election or appointment and, upon the re-election
of a non-employee director at an annual meeting of the Company's stockholders,
such director will be granted an option to purchase an additional 1,000 shares
as of the date of such election. As of August 16, 1995, a total of 81,000
shares are reserved for issuance upon exercise of options granted under the
Directors' Plan and 41,500 shares were reserved for exercise upon the future
grant of options under the Directors' Plan. Mr. Erdahl holds options covering
21,000 shares under the Directors' Plan and each of Messrs. Willmott, Ireland
and Tompkins holds options covering 20,000 shares under the Directors' Plan.
In addition, the Board of Directors granted each of Messrs. Ireland, Tompkins
and Erdahl options to purchase 100,000 shares of Common Stock subject to
stockholder approval. Those options were not granted under the Directors'
Plan. Cash compensation for 1994 to the non-
17
<PAGE> 21
employee directors was paid at the rate of $3,000 per quarter plus $1,000 per
meeting attended of the Board and committees of the Board.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In August 1994, the Company formed a Compensation Committee to determine
the compensation of the executive officers and to set the guidelines for
compensation for the employees of the Company. During the fiscal year ended
December 31, 1994, the Compensation Committee was comprised of Leland O. Erdahl
and Paul K. Willmott.
During 1994, Mr. Willmott was a senior vice president of the Concord
Mining Unit, which was controlled by Mr. Benton. He resigned from both
entities on February 22, 1995. Mr. Erdahl served as a consultant to Concord
Services, Inc. until September 1994. His total compensation for his service
was $56,250.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
NEGOTIATIONS WITH CITIBANK AND ADVANCES BY BENTON
Beginning in late 1993, in connection with their negotiations to acquire a
majority interest in the Company's Common Stock (as described below under the
caption "Acquisition of Shares by Benton"), Mr. Benton and Concord
International Mining and Management Corp. ("CIMM"), a Denver, Colorado based
company of which Mr. Benton is the owner, President and Chairman of the Board,
undertook negotiations with Citibank, N.A. ("Citibank") concerning the purchase
or restructuring of the Company's senior debt (the "Citibank Note") and related
fee and other obligations (the Citibank Note, together with such fee
obligations are collectively referred to as the "Citibank Obligations")
($10,550,000 was owed at December 31, 1993).
To enable the Company to meet its short-term liquidity requirements while
negotiations with Citibank were in progress, Mr. Benton advanced $1,125,000 to
the Company in January 1994 and $1,125,000 in April 1994. The advances made to
the Company by Mr. Benton accrued interest at Citibank's prime rate plus 3%.
Mr. Benton also guaranteed the Company's payment obligations through December
31, 1994 on the Citibank Note. On August 19, 1994, the $2,250,000 in advances
together with accrued but unpaid interest of $106,189 were converted into
equity by the Company's issuance to Mr. Benton of 496,040 shares of Common
Stock at a valuation of $4.75 per share.
ACQUISITION OF CITIBANK NOTE BY BENTON
On June 13, 1994, certain partnerships affiliated with Mr. Benton and
Concord entered into agreements with Citibank to acquire the Citibank
Obligations for cash. Concurrently, the
18
<PAGE> 22
Company entered into an agreement with the partnerships to exchange the
Citibank Obligations (approximately $8,200,000 at June 30, 1994) for
convertible promissory notes of the Company, convertible into Common Stock at a
conversion rate of one share for each $4.75 principal amount of convertible
notes.
The foregoing agreements were superseded on August 19, 1994 by new
agreements involving Nuexco Exchange, A.G. ("NEAG") (hereinafter referred to
as the "NEAG Agreements"). NEAG is owned by Mr. Benton. In accordance with
the NEAG Agreements, on August 19, 1994 CIMM purchased the Citibank
Obligations for $6.5 million in cash and assigned its rights to the Citibank
Note to NEAG in exchange for $6.5 million. The Company executed a note for
$6.5 million payable to NEAG replacing the original Citibank Note. NEAG loaned
the Company an additional $6 million, evidenced by a promissory note in that
amount. The $6,000,000 borrowed from NEAG was paid to EFN to purchase 648,648
pounds of uranium concentrates at $9.25 per pound. To provide the funds for
the purchase of the Citibank Obligations and for the additional loan to the
Company, NEAG borrowed $12.5 million from Union Bank of Switzerland (the "UBS
Loan").
The combined notes of $12,500,000 are hereinafter referred to as the "NEAG
Notes." The NEAG Notes bear interest at the Citibank prime rate and are
payable in installments which coincide with payments the Company expects to
receive from its customers under existing contracts. The NEAG Notes were
secured originally by 599,573 pounds of uranium purchased from EFN and by the
contracts between the Company and certain utilities for delivery of uranium.
NEAG assigned the NEAG Notes and the security to UBS as security for its loans
from UBS. NEAG and UBS released all other collateral that had secured the
original Citibank Note.
At December 31, 1994 the outstanding balance on the NEAG Notes was
$7,739,225, and 430,823 pounds of uranium in the Company's inventory were
pledged by the Company to secure the notes. As of July 31, 1995 the Company's
records indicate that the outstanding balance on the NEAG Notes was $232,934.90
and no pounds of uranium in the Company's inventory were pledged by the Company
to secure the NEAG Notes. UBS has informed the Company that its records
indicate that the outstanding balance on the NEAG Notes was $516,268.90 on that
date. The $283,334 difference between the amount calculated by the Company and
the amount calculated by UBS represents a payment the Company made to CSI on
December 23, 1994 for payment to UBS consisting of a $264,668 interest payment
and an additional $18,666 payment of principal. UBS has informed the Company
that it has not received this $283,334 payment. The Company is currently
working with UBS to resolve this matter.
PURCHASES OF URANIUM FROM THE COMPANY BY BENTON AFFILIATES
On August 19, 1994, the Company and EFN entered into an agreement pursuant
to which the Company assigned to EFN its rights under two agreements, one with
Uranerz Exploration Mining Limited ("UEM") and the other with Uranerz U.S.A.,
Inc. ("USA") (UEM and USA
19
<PAGE> 23
are hereinafter referred to as the "Uranerz Entities"). The agreements
provided for the purchase by the Company of an aggregate of 600,000 pounds of
uranium through December 1995. No consent was sought or obtained from the
Uranerz Entities. As a result, the assignment to EFN may not be enforceable.
On August 31, 1994 and September 30, 1994, the Company purchased 50,000 and
100,000 pounds, respectively, of uranium from the Uranerz Entities for
$1,791,500 and resold the uranium to EFN for the same price.
In a separate transaction, on August 31, 1994, the Company purchased
100,000 pounds of uranium from U.G. USA, Inc. and resold the same to EFX for
$940,000.
The aggregate purchase price for the foregoing purchases was $2,731,500.
EFN and EFX defaulted on their payment obligations to the Company. On October
28, 1994 and November 7, 1994, partial payments aggregating $1,850,000 were
made to the Company by companies owned by Mr. Benton leaving a balance of
$914,506 (including accrued interest).
On November 18, 1994 the remaining balance was settled by the assignment
from EFL of a contract dated April 30, 1993 between EFL and Scottish Nuclear
Limited ("SNL") pursuant to which EFL had the right to supply SNL 201,880
pounds of uranium during 1995 and 1996 (the "Scottish Nuclear Contract"). The
Company and EFL valued the Scottish Nuclear Contract at $4,500,000. In
consideration of the excess value received from the Scottish Nuclear Contract,
the Company issued to CIMM 736,842 shares of Common Stock.
The valuation of the Scottish Nuclear Contract was based on the Company's
expectation that it could assign the delivery rights to a third party or
finance such contract and receive cash of $4,500,000 in consideration of such
assignment or financing. However, attempts to assign or finance the delivery
rights proved unsuccessful. The Company then negotiated an early delivery of
the uranium to SNL in exchange for a discount of the contract price. The
deliveries were accelerated to December 1994. On December 23, 1994, the
Company realized net proceeds of $4,150,735 in cash as a result of the
foregoing. From these proceeds U.G. USA, Inc. was paid $1,021,390 for the
uranium which had been purchased by the Company on August 31, 1994.
Approximately $515,000 was used to pay Company payables and payroll. In
addition, $534,174 was paid to CSI of which $250,830 was to reimburse CIMM for
salary and expenses for Messrs. Mays, Willmott, Fowler and Erdahl which CIMM
billed to the Company and $283,344 was for interest and principal on the NEAG
Notes.
BENTON TRANSFER AND SEC INVESTIGATION
Between January 17, 1995 and January 20, 1995, Oren L. Benton, then the
Chairman of the Board and Chief Executive Officer of the Company, transferred
$1,080,000 of the Company's funds to CSI Enterprises, Inc. ("CSI"), Energy
Fuels Exploration, Inc. ("EFX") and an individual affiliated with Mr. Benton.
CSI and EFX are owned or controlled by Mr. Benton, and both companies are now
in bankruptcy. The transfer of funds was not authorized by the Company's Board
of Directors. The Company is pursuing various actions to recover the
20
<PAGE> 24
$1,080,000 and has recovered $300,000 of the total so far. The ability of the
Company to recover the balance is not certain. See Election of
Directors--Legal Proceedings.
In addition, the Securities and Exchange Commission is currently
conducting an informal investigation relating to the Company's liquidity
problems during 1994 and 1995. The Company is unable to predict the outcome of
this investigation.
CIMM AGREEMENT TO PURCHASE ADDITIONAL SHARES OF COMMON STOCK
In August 1994, the Company entered into an agreement with CIMM which gave
the Company the right, prior to August 18, 1997, to require CIMM to purchase up
to $6,996,750 of Common Stock at a per share price of $4.75 (1,473,000 shares).
CIMM was granted demand and piggy-back registration rights for such shares.
Benton guaranteed CIMM's performance of its obligations under this agreement.
The issuance of the 736,842 shares to CIMM in connection with the assignment of
the Scottish Nuclear Contract was credited against this obligation.
MILL JOINT VENTURE
In the Fall of 1994, the Company entered into discussions with EFL
relating to the creation of a joint venture for the processing of approximately
2 million pounds of uranium. The uranium was previously mined but
not-yet-milled uranium produced from mines in Arizona owned by partnerships in
which EFL was the general partner and various Swiss utilities were the limited
partners. The uranium was to be processed through the White Mesa Mill located
in Utah which was owned by a partnership whose general partner is EFN and whose
limited partners are some of the same Swiss utilities that own an interest in
the Arizona mines.
On January 11, 1995 the Company accepted EFL's proposal for a joint
venture and transferred $1 million to EFX in partial performance of its
obligations under the joint venture. The terms and conditions of the joint
venture were set forth in a draft joint venture agreement, but the agreement
has not been executed. Because of the bankruptcy of various entities
controlled by Mr. Benton, the realizability of the $1 million investment is
doubtful.
WYOMING AND SOUTH DAKOTA JOINT VENTURE
On November 18, 1994 the Company entered into an agreement with EFL to
acquire from EFL a 45% interest in the Cheyenne River Partners Limited
Partnership. The Partnership controls 13 million pounds of uranium reserves
located in Wyoming and South Dakota. The remaining ownership in the
partnership is EFL 15% and various Swiss partners 40%. Under the agreement,
the Company would be the general partner and the operator of the properties.
The Company's 45% interest would be acquired through the issuance of 360,000
shares of the Common Stock of the Company at a valuation of $6.00 per share.
The transfer of the
21
<PAGE> 25
partnership interest and the issuance of the shares has not been consummated.
Because of the Benton Bankruptcy, it is uncertain whether this transaction will
be consummated.
LOANS FROM WALLACE M. MAYS AND CERTAIN CURRENT AND FORMER MEMBERS OF MANAGEMENT
Mr. Mays loaned the Company $65,000 on February 24, 1995 and $25,000 on
March 27, 1995 (the "Mays Loans") in exchange for notes issued by the Company
and a deed of trust on the Rosita property as collateral. Certain current and
former members of management have made loans to employees of the Company during
1994 and 1995. In addition, a partnership in which certain current and former
members of management are the partners loaned the Company $25,000 on April 7,
1995. On May 17, 1995, William M. McKnight, Jr. loaned the Company $20,000.
On May 26, 1995, the Mays Loans were repaid by the Company. The remaining
loans continue to be outstanding.
OTHER PAYMENTS TO BENTON'S AFFILIATES
In addition to the various payments to affiliates of Mr. Benton described
under the foregoing captions, the following payments were made during 1994 and
the first quarter of 1995 by the Company to entities owned, controlled, or
otherwise affiliated with Mr. Benton: $39,355 to reimburse CIS for the salary
of Mr. Mays, $5,800 to reimburse CIS for certain travel and other expenses and
$115,533 for legal and other fees related to the Citibank debt restructuring.
OTHER
On September 7, 1994, the Company made a short-term loan of $1,200,000 to
Intercontinental Energy Corporation ("IEC"). Such loan bore interest at 10%
per annum and was repaid in full on September 20, 1994. Mr. Wallace M. Mays,
President and Chairman of the Board of the Company until July 31, 1995, was the
President of IEC until February 22, 1995 when he resigned.
ACQUISITION OF SHARES BY MR. BENTON
Except as indicated, the following information is based on Schedule 13Ds
filed with the Securities and Exchange Commission (the "SEC") and has not been
independently verified.
From mid-1993 through early 1995, certain shareholders of the Company --
including, at various times, Harry L. Anthony, IV, Judith A. Anthony, Craig S.
Bartels, Kelly L. Biddle, Richard F. Clement, Jr., Sergio Garza, Raymond G.
Larson, William M. McKnight, Jr., Mark S. Pelizza and James M. Russell
negotiated with Oren L. Benton and CIMM to reach an arrangement (i) by which
such shareholders would transfer shares to CIMM or other Benton-
22
<PAGE> 26
controlled entities or certain person designated by Benton and (ii) as a
condition to which the Company's outstanding indebtedness to Citibank would be
restructured on terms satisfactory to the Company. These negotiations and
certain agreements entered into in pursuit of them are summarized below and in
other sections of this report.
In September 1993 the foregoing shareholders of the Company (the
"September Shareholders"), announced that they had agreed in principle to
contribute their 3,528,746 shares of Common Stock of the Company (53% of the
outstanding shares at September 2, 1993) owned by them or by trusts of which
they act as trustees, to a limited partnership, the general partner of which
was CIMM. CIMM would contribute to the limited partnership assets with a value
equal to $4.00 times the number of shares contributed by the September
Shareholders. At that time Messrs. Anthony, Clement, Larson and McKnight were
directors and officers of the Company. In return for such contributions, the
September Shareholders would receive limited partnership units equal to the
number of shares of Common Stock contributed and CIMM would receive an equal
number of units. Among the anticipated results of the proposed transfer stated
to have been anticipated by the September Shareholders were (i) acquisition by
the limited partnership of a majority of the then outstanding Common Stock of
the Company, (ii) a restructuring or replacement of the Company's then existing
bank credit agreement on terms satisfactory to the Company, (iii) a beneficial
association with the Concord companies, including enhanced access to
international uranium markets, and (iv) the participation of the September
Shareholders, to a reduced extent, in increases in the Company's market value
and to receive certain downside protection on the value of their Common Stock
upon an ultimate disposition of their limited partnership interests. No
definitive agreement to implement the agreement in principle was executed.
In February 1994, the foregoing agreement in principle was terminated and
all the September Shareholders except Mr. Garza (the "February Shareholders")
entered into option agreements (the "February Agreements") with six limited
partnerships, the general partner of which was CIMM. Pursuant to the February
Agreements, the February Shareholders could require the partnerships to
purchase a total of 3,482,494 shares of the Company's Common Stock that the
February Shareholders then held at an exercise price of $4.00 per share. CIMM,
as general partner, controlled the limited partnerships, which, upon completion
of the transaction, would, collectively, have held a majority of the Company's
outstanding Common Stock. The February Shareholders stated that they
anticipated that this transaction, or a similar transaction to be negotiated by
the parties with another Benton-designated entity, would also have the effects
described in clauses (i) through (iii) of the last sentence of the preceding
paragraph. The February Agreements expired unexercised on March 31, 1994.
In July 1994, the February Shareholders entered into agreements with
certain persons, including Mr. Wallace M. Mays and certain persons who were
either associated with Mr. Benton or were designated by him (the "Optionees"),
granting the Optionees the right to acquire a total of 3,109,979 shares of the
Company's Common Stock owned by the February Shareholders (the "Call Option
Agreements"). The Call Option Agreements provided for the February
Shareholders to receive amounts ranging from $.90 to $1.10 per share for the
grant
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<PAGE> 27
of such call options. The exercise prices of the call options ranged from
$3.35 to $3.65, so that the total consideration that would have been payable to
the February Shareholders if the call options were exercised ranged from $4.45
to $4.55. The Optionees could exercise their rights at certain times between
September 9, 1994, and December 20, 1994. (Certain of the February
Shareholders executed extensions of certain of their call options to dates not
later than January 10, 1995.) A total of 424,409 shares of Common Stock were
sold pursuant to the exercise of certain of the Call Option Agreements.
Several other purported notices of exercise of the call options were given, but
no closing occurred with respect thereto. An additional 190,000 shares were
sold by the February Shareholders to the Optionees or to other
Benton-designated purchasers otherwise than pursuant to the Call Option
Agreements. Mr. Larson also agreed to sell 20,000 shares of Common Stock that
had been covered by an expired Call Option Agreement to Mr. Benton, but such
sale was not completed.
In addition, in July 1994, the February Shareholders holding a total of
3,482,224 shares of the Company's Common Stock, entered into new put option
agreements with four of the aforementioned CIMM-controlled limited partnerships
granting the February Shareholders the right to require such partnerships to
purchase any of such shares of the Company's Common Stock not sold pursuant to
the Call Option Agreements (the "Put Option Agreements"). The put options
under the Put Option Agreements were exercisable between December 21, 1994 and
January 21, 1995 for $4.00 per share. In June 1994, such four CIMM-controlled
limited partnerships had previously entered into arrangements with the Company
to restructure certain indebtedness of the Company to Citibank as described
above under the caption "Acquisition of Citibank Notes by Benton" and as
contemplated by the prior negotiations of the February Shareholders with Benton
and CIMM.
Certain of the Optionees may also have had arrangements with Mr. Benton in
connection with the Call Option Agreements whereby Mr. Benton would agree to
finance their acquisition of the shares of Common Stock and/or acquire a right
to purchase such options or shares from the Optionees. None of the information
in this paragraph concerning the financing by Benton or his right to acquire
shares from the Optionees has been independently verified because no documents
have been filed with the SEC by Mr. Benton or the Optionees describing such
arrangements.
Except as discussed above, the Put Option Agreements and Call Option
Agreements expired unexercised. Mr. Benton represented to the February
Shareholders that certain of the call options under the Call Option Agreements
(excluding those held by Mr. Mays) had been assigned to him and requested that
such call options and Mr. Mays's call options be reinstated and amended. On
various dates in January and February 1995, but effective as of January 4,
1995, Messrs. Larson, Anthony, Clement, Russell, Pelizza, and McKnight and Ms.
Anthony (the "January Shareholders") entered into agreements with CIMM and/or
Mr. Mays to reinstate and/or amend their Call Option Agreements (the "Amended
Call Option Agreements"). (Mr. Biddle declined to reinstate his Call Option
Agreement, and Mr. Bartels had sold all his shares pursuant to the exercise of
the call options under his Call Option Agreements.) Under the Amended Call
Option Agreements, as consideration for the reinstatement and/or amendment of
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<PAGE> 28
the call options held by CIMM and Mr. Mays, CIMM and/or Mr. Mays agreed to pay
the January Shareholders cash totalling $63,311 and CIMM agreed to cause EFX to
grant each of the January Shareholders a carried, non-contributory limited
partnership interest in Gobi Development Limited Partnership (a limited
partnership to which EFX agreed to contribute its 70% interest in a joint
venture owning various uranium properties in Mongolia), to cause EFX to
repurchase any such limited partnership interest in the event of the death of
any January Shareholder who held such interest for amounts ranging from
$100,000 to $1,500,000 to cause EFX to maintain life insurance policies on the
January Shareholders sufficient to fund such repurchase obligations and to
secure the obligations of CIMM and Mr. Mays under the Amended Call Option
Agreements with the pledge of a total of 1,000,000 shares of Common Stock of
the Company. Under the Amended Call Option Agreements, CIMM acquired call
options covering a total of 1,711,530 shares and Mr. Mays acquired call options
covering a total of 205,678 shares exercisable at exercise prices equal to
$4.00 per share; the expiration date was changed to March 31, 1996; CIMM and/or
Mr. Mays agreed to pay the January Shareholders $.10 per share per quarter
commencing with the first quarter of 1995 to maintain the call options in
existence; the January Shareholders were granted a right to put the shares to
CIMM during the last 10 days of any calendar quarter during the option term at
a price of $4.00 per share; and each January Shareholder granted CIMM a proxy
to vote the shares (including the shares under option to Mr. Mays).
Pursuant to the Amended Call Option Agreements, the call options covered a
total of 1,917,208 shares: 680,455 shares held by Mr. Larson, 205,007 shares
held by a trust of which Mr. and Mrs. Anthony act as the trustees, 156,130
shares held by Mr. Clement, 77,678 shares held by Mr. Russell 144,913 shares
held by Mr. Pelizza and 653,025 shares held by two trusts of which Mr. McKnight
acts as trustee.
The Company has been informed that on March 2, 1995, Mr. Pelizza
terminated the call options under his Amended Call Option Agreements with CIMM
and Mr. Mays (and the related proxies held by CIMM) as a result of the dishonor
of checks tendered to him for the reinstatement and amendment of the Call
Option Agreements. The Company has also been informed that on March 22, 1995,
each of the other January Shareholders exercised his or her right to put the
remaining 1,626,617 shares subject to the options to CIMM and the remaining
145,678 shares subject to the options to Wallace M. Mays. Neither CIMM nor Mr.
Mays performed their obligations to purchase the January Shareholders' shares
of Common Stock upon exercise of the put. On March 30, 1995, as a result of
such failure, the other January Shareholders exercised their right of
termination under the Call Option Agreements thereby terminating the call
options held by CIMM and Mr. Mays under the Amended Call Option Agreements and
terminated the proxies granted to CIMM with respect to such shares; and neither
CIMM nor Mr. Mays now has any rights with respect to the shares discussed
above.
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<PAGE> 29
LINDNER NOTES AND WARRANTS
On May 25, 1995, the Company received $6,000,000 in cash through the
issuance of 6.5% secured convertible notes in the aggregate principal amounts
of $1,500,000 and $4,500,000 initially convertible at $4.00 per share into
375,000 and 1,125,000 shares of Common Stock to Lindner Investments and Lindner
Dividend, respectively. In addition, the Company issued immediately
exercisable warrants to purchase 375,000 shares and 1,125,000 shares of the
Company's Common Stock at an initial exercise price of $4.00 per share to
Lindner Investments and Lindner Dividend, respectively. For the material
provisions of the notes and warrants, see Proposal to Approve the Stock Issue
Transaction.
SECTION 16 REPORTING
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the SEC and the National Association of
Securities Dealers, Inc. Officers, directors, and greater than 10%
stockholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) filings.
Based solely on its review of copies of such forms received by it and
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during, the year ended
December 31, 1994, its officers, directors, and greater than 10% beneficial
owners complied with all applicable filing requirements except as noted below.
The Company is not aware of any Form 4 or Form 5 filing for Oren L. Benton
or any related entities since Mr. Benton's original Form 3 filing on January
11, 1995.
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company's Board of Directors was formed
on August 10, 1994. Messrs. Erdahl and Willmott were its original members.
Currently, the Compensation Committee consists of Messrs. Erdahl, Ireland and
Tompkins. Prior to forming the Compensation Committee, all of the directors
then serving on the Board of Directors participated in the process of
determining the compensation of the Company's executive officers, including
executive officer compensation for the fiscal year ended December 31, 1994.
The current members of the Board of Directors, however, did not take part in
establishing compensation for the executive officers in 1994 because all
current directors were not appointed to the Board until after 1994 executive
compensation was set. Therefore, neither the current
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<PAGE> 30
members of the Compensation Committee nor the current members of the Board of
Directors can describe the factors the Board used in 1993 to establish 1994
executive compensation.
October 11, 1995
MEMBERS OF THE BOARD OF DIRECTORS
Paul K. Willmott
Leland O. Erdahl
George R. Ireland
James B. Tompkins
STOCK PRICE PERFORMANCE GRAPH
The following graph compares the performance of the Company's Common Stock
to the CRSP Total Return Index for The Nasdaq Stock Market (U.S. Companies) and
to a self-determined peer group comprised of American Nuclear Corporation,
United States Energy Corp. and Rio Algom Mines, Ltd. for the Company's last
five fiscal years. The graph assumes that the value of an investment in the
Company's Common Stock and each index was $100 at December 29, 1989, and that
all dividends were reinvested.
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<PAGE> 31
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
1989-1994
[GRAPH]
*Total return assumes reinvestment of dividends.
...___...___ represents Nasdaq Stock Market
- ------------ represents Self-Determined Peer Group
____________ represents Uranium Resources
<TABLE>
<CAPTION>
Total Returns Index For: 12/29/89 12/31/90 12/31/91 12/31/92 12/31/93 12/30/94
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Nasdaq Stock Market
(U.S. Companies) (a) $100 $84.9 $136.3 $158.6 $180.9 $176.9
Self-Determined Peer Group (b)(c) 100 88.7 111.9 108.6 137.2 155.2
Uranium Resources, Inc. (c) 100 72.1 39.1 53.5 59.7 100.6
</TABLE>
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<PAGE> 32
(a) Source: National Association of Securities Dealers, Inc. All dividends
are reinvested on the ex-dividend date. The CRSP Total Return Index
includes all domestic common shares traded on the NASDAQ National Market
and the NASDAQ Small-Cap Market.
(b) Comprised of American Nuclear Corporation, United States Energy Corp. and
Rio Algom Mines, Ltd.
(c) Source: The Center for Research in Security Prices (affiliated with the
University of Chicago Graduate School of Business). All dividends are
reinvested on ex-dividend date.
PROPOSAL TO APPROVE THE
1995 STOCK INCENTIVE PLAN
(PROPOSAL 2 ON PROXY CARD)
On October 11, 1995, the Board of Directors adopted the 1995 Stock
Incentive Plan (the "Stock Incentive Plan"), subject to stockholder approval at
the Meeting. The Stock Incentive Plan will enable the Company to provide
incentives to employees to perform well in a difficult and rapidly changing
environment in the uranium mining industry. The Company seeks to retain such
valuable employees as such employees will be performing important roles in
returning the Company's mining properties to production.
At the Meeting, the stockholders are being requested to consider and
approve the Stock Incentive Plan. The affirmative vote of the holders of a
majority of the outstanding shares of the Common Stock present at the Meeting,
either in person or by proxy, will be required to approve the Stock Incentive
Plan.
The essential features of the Stock Incentive Plan are outlined below, but
such description is qualified in its entirety by reference to the Stock
Incentive Plan, which is attached hereto as Exhibit A.
TYPES OF AWARDS. Under the Stock Incentive Plan, the Company may grant
awards of stock options to its key employees and to the key employees of its
subsidiaries.
ADMINISTRATION. The Stock Incentive Plan is administered by the
Compensation Committee of the Board of Directors composed of no fewer than two
disinterested members. Subject to the terms of the Stock Incentive Plan, the
Compensation Committee determines, among other matters, persons to whom awards
are granted, type of award granted, number of options granted, vesting
schedule, type of consideration to be paid to the Company upon exercise of
options and the terms of any option (which cannot exceed ten years).
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<PAGE> 33
NUMBER OF SHARES. The Company may issue options to purchase an aggregate
of 750,000 shares of Common Stock under the Stock Incentive Plan.
STOCK OPTION TERMS. The Company may grant both incentive stock options
("incentive stock options") intended to qualify under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and options which are
not qualified as incentive stock options ("non-qualified options"). Incentive
stock options may not be granted at an exercise price less than the fair market
value of the Common Stock on the date of grant. The exercise price of
incentive stock options granted to holders of more than 10% of the Common Stock
must be at least 110% of the fair market value of the Common Stock on the date
of grant, and the term of these options cannot exceed five years. The exercise
price of non-qualified stock options will be determined by the Compensation
Committee on the date of grant but may not be less than 85% of the fair market
value of the Common Stock on that date.
Options granted under the Stock Incentive Plan are not transferrable,
otherwise than by will or the laws of descent and distribution, and during the
lifetime of the optionholder, options are exercisable only by such
optionholder. Stock options granted pursuant to the Stock Incentive Plan may
not be exercised more than three months (but in no event beyond the expiration
date of the option) after the optionholder ceases to be an employee of the
Company, except that in the event of the death or permanent and total
disability of the optionholder, the option may be exercised by the holder (or
his estate, as the case may be), until the first to occur of the expiration of
the option period or the expiration of one year after the date of death or
permanent or total disability. The exercise price may be paid in cash, in
shares of Common Stock (valued at fair market value at the date of exercise),
by delivery of a promissory note or by a combination of such means of payment,
as may be determined by the Compensation Committee.
CHANGE IN CONTROL; ADJUSTMENT IN NUMBER OF OPTION SHARES. Upon a Change
of Control (as defined in Section 9 of the Stock Incentive Plan) of the
Company, all stock options granted under the Stock Incentive Plan will become
exercisable in full. Also, in the event the number of outstanding shares of
Common Stock is increased or decreased or changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or of another company, whether as a result of a stock split, stock dividend,
combination or exchange of shares, merger or otherwise, each share subject to
an unexercised option will be substituted for the number and kind of shares of
stock into which each share of outstanding Common Stock is to be changed or for
which each such share is to be exchanged and the option price will be increased
or decreased proportionately.
FEDERAL INCOME TAX CONSEQUENCES--STOCK OPTIONS. Neither the Company nor
the optionee will recognize taxable income or deduction for federal income tax
purposes from the grant or exercise of an incentive stock option. When an
optionee sells stock acquired upon exercise of an incentive stock option, the
optionee will be taxed at long-term capital gain rates if the stock has been
held for at least one year and the option was granted at least two years prior
to the date of sale ("Holding Period Requirements"). If the optionee fails to
meet the Holding Period Requirements, the difference between the exercise price
and the fair market value of the stock
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<PAGE> 34
at the time of exercise will be taxable to the optionee as ordinary income and
the Company will be entitled to a deduction equal to the amount of ordinary
income recognized by the optionee if the Company complies with applicable
withholding requirements and if the amount qualifies as an ordinary and
necessary business expense to the Company. Although the optionee will not
recognize taxable income for federal income tax purposes upon the exercise of
an incentive stock option, the difference between the exercise price and fair
market value of the shares at the time of exercise gives rise to an adjustment
in calculating alternative minimum taxable income.
Neither the Company nor the optionee will recognize taxable income or
deduction from the grant of a non-qualified stock option. At the time of
exercise of a non-qualified stock option, the optionee will recognize ordinary
income in an amount equal to the difference between the exercise price and the
fair market value of the Common Stock. The Company will be entitled to a
deduction for tax purposes in an amount equal to the ordinary income recognized
by the optionee, if the Company complies with applicable tax withholding
requirements.
AMENDMENT OF STOCK INCENTIVE PLAN. The Board of Directors may at any time
and from any time alter, amend, suspend, or discontinue the Stock Incentive
Plan, except no such action may be taken without stockholder approval which
materially increase the benefits to participants under the Stock Incentive
Plan, materially increases the number of shares to be issued, materially
extends the period for granting awards, or materially modifies the requirements
as to eligibility. In addition, no such action may be taken which adversely
affects the rights of a participant under the Stock Incentive Plan without his
consent.
VOTE REQUIRED FOR APPROVAL OF THE AMENDMENT TO THE STOCK INCENTIVE PLAN.
Approval of the amendment to the Stock Incentive Plan requires the affirmative
vote of the holders of a majority of the Common Stock present, or represented,
and entitled to vote at the Meeting assuming the presence of a quorum. Each
share of Common Stock is entitled to one vote.
Stockholders should note that because employee directors (subject to
re-election and stockholder approval) may in the future receive stock options
under the Stock Incentive Plan, the current employee directors of the Company
have a personal interest in the proposal and its approval by stockholders.
However, the members of the Board of Directors believe that the amendment is in
the best interests of the Company and its stockholders.
PROPOSAL TO APPROVE THE STOCK ISSUE TRANSACTION
(PROPOSAL 3 ON PROXY CARD)
On May 25, 1995, the Company received $6,000,000 pursuant to a Note and
Warrant Purchase Agreement (the "Purchase Agreement") dated May 25, 1995, by
and among the Company, Lindner Investments (on behalf of Lindner Bulwark Fund,
Inc.) and Lindner Dividend. Pursuant to the Purchase Agreement, Lindner
Investments (on behalf of Lindner Bulwark Fund, Inc.) and Lindner Dividend
(collectively, "Lindner") purchased certain notes (the "Notes") in the
aggregate principal amounts of $1,500,000 and $4,500,000, respectively. In
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<PAGE> 35
addition, the Company issued warrants ("Warrants") to purchase 375,000 shares
and 1,125,000 shares of the Company's Common Stock at a purchase price of $4.00
per share to Lindner Investments (on behalf of Lindner Bulwark Fund, Inc.) and
Lindner Dividend, respectively. Prior to this transaction, another member of
the Lindner Group, Lindner Fund, Inc., was the beneficial owner of 821,525
outstanding shares of the Company's Common Stock, representing 34.8% of the
outstanding shares of Common Stock. The Lindner Group may be deemed an
affiliate of the Company.
Pursuant to the Purchase Agreement, the Company has agreed to seek the
approval of stockholders for issuance of Common Stock upon conversion of the
Notes and exercise of the Warrants.
BACKGROUND
As discussed under "Certain Relationships and Related Transactions -
Benton Transfer and SEC Investigation and Mill Joint Venture" between January
11, 1995 and January 20, 1995 a total of $2,080,000 cash was transferred from
the Company to entities or persons owned, controlled or affiliated with Oren L.
Benton. These transfers left the Company without funds to pay its creditors
and employees and facing a liquidity crises which could be solved only by
raising new capital. In addition to obligations to creditors and employees,
the Company needed $4 million for purposes of bringing its Rosita property back
into production and making pre-production expenditures at the Company's
Kingsville Dome property.
Beginning in late February, 1995, the Company began pursuing various
options for raising the necessary capital. The only source that expressed an
interest in pursuing serious discussions was the Lindner Group, of which
Lindner Fund, Inc. was an existing significant shareholder of the Company.
Negotiations with the Lindner Group resulted in the consummation of the $6
million loan from the members of the Lindner Group to the Company on May 25,
1995.
The Board of Directors approved the Stock Issue Transaction because it
considered the transaction to be in the best interests of the Company and all
its stockholders. The loss of the $2,080,000 in cash between January 11 and
January 20, 1995 rendered the Company insolvent, and its very survival was in
doubt. Without a cash infusion the Company would have been unable to continue
to employ its key employees, to pay trade creditors that were owed
approximately $1.5 million and to continue to function as a going concern. The
only offer for a cash infusion available to the Company was the offer of the
Lindner Group, of which Lindner Fund, Inc. was already a substantial
shareholder. The Board considered the terms of the loan to be reasonable under
the circumstances. The conversion price of the Notes and the exercise price of
the Warrants was at a reasonable premium to the then market price of the Common
Stock, and, as a result, the potential ownership by the Lindner Group upon
conversion and exercise was considered reasonable. The addition of two Board
members designated by the Lindner Group strengthened the Board by adding two
individuals whose expertise and experience supplemented that of the existing
Board and helped distance the Company from its prior
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<PAGE> 36
relationship with Oren L. Benton. The Board believed that all of the foregoing
would enhance the value of the Company for the benefit of all stockholders.
For all of the foregoing reasons, the Board of Directors is recommending
approval by the stockholders of the Stock Issue Transaction.
The following is a summary of the material terms of the Notes and the
Warrants:
NOTES
General. The Notes bear interest on the unpaid principal balance at the
rate of 6.5% per annum payable quarterly in arrears until the Notes mature on
May 31, 1998. The Notes convert into 1,500,000 shares of Common Stock at an
initial conversion price of $4.00 per share. If all the Notes and Warrants
were converted and exercised at the current conversion and exercise prices,
Lindner would control 34.8% of shares of Common Stock outstanding as of August
16, 1995.
Pursuant to the Purchase Agreement, the Company agreed to appoint, on an
interim basis, two designees of Lindner to the Board of Directors and to
nominate the designees for re-election to the Board at each annual meeting of
the Company while the Notes remain unpaid. In addition, the Company agreed to
obtain stockholder approval, on or before December 31, 1995, of the issuance of
the Common Stock to the holder of the Notes and Warrants. Failure to obtain
such stockholder approval will constitute an Event of Default under the
Purchase Agreement and permit the holders of such Note to declare principal and
interest on the Notes immediately due and payable. See --Events of Default.
Security. URI, Inc., a Delaware corporation and wholly-owned subsidiary
of the Company has guaranteed the obligations of the Company under the Notes.
The guaranty is secured by (a) a first lien on leases on the Company's
Kingsville Dome and Rosita properties located in Kleberg County, Texas and
Duval County, Texas, respectively, (b) the lands subject to those leases, (c)
permits, licenses and easements in those leases, (d) a security interest in all
plant and equipment on the lands and (e) any additional after-acquired rights
and interests in the lands and leases.
Anti-Dilution Provisions. If prior to conversion or payment of Notes, the
Company declares dividends or makes distributions on outstanding Common Stock
payable in shares of Common Stock, subdivides outstanding shares of Common
Stock into a greater number of shares, combines outstanding shares of Common
Stock into a smaller number of shares or issues shares of capital stock by
reclassification or capital reorganization, the conversion price for the Notes
will be adjusted. The adjustment will entitle the Note holder to receive the
number and kind of shares of Common Stock or other capital stock upon
conversion which the holder would have owned or have been entitled to receive
immediately after the action had the holder converted the Note prior to the
action. The conversion price of the Notes will also be adjusted in order to
maintain the value of the conversion right if before conversion of all of the
Notes, the Company issues Common Stock at below 98% of its market price, issues
securities convertible into
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<PAGE> 37
Common Stock at a conversion price below 98% of the market price of the Common
Stock, or distributes securities convertible into Common Stock to all holders
of Common Stock.
Restrictions on Debt. The Company agreed that neither the Company nor any
subsidiary of the Company (a "Subsidiary") would (a) create any additional lien
on property of the Company or any Subsidiary other than existing liens and
liens for working capital purposes attached to the Company's or a Subsidiary's
inventory or certain intangibles or (b) create any additional debt other than
existing debt, accounts payable, working capital debt of not more than
$5,000,000 and debt between the Company and any Subsidiary. The Company
further agreed not to declare or make dividend payments or other distributions
to holders of the Company's or a Subsidiary's capital stock nor to purchase, or
allow a Subsidiary to purchase, outstanding capital stock of the Company.
Events of Default. An Event of Default occurs if (a) the Company defaults
in payment of principal or interest on any Note; (b) the Company or any
subsidiary fails to comply with any term or covenant of the Purchase Agreement;
(c) an event of default occurs under any mortgage, indenture or instrument
securing debt of the Company if as a result the debt is due in full in an
amount greater than $500,000 (d) the Company fails to obtain shareholder
approval for the issuance of Common Stock upon the conversion of the Notes and
the exercise of the Warrants, (e) the Company uses any proceeds from sale of
the Notes other than as specified in the Purchase Agreement; (f) a final
judgment for payment of $500,000 or more is entered against the Company or a
Subsidiary which remains unpaid for 30 days; (g) the Company or URI, Inc.
files for voluntary bankruptcy or seeks similar relief under any debt law; (h)
a bankruptcy petition is filed against the Company and is not dismissed within
60 days; (i) the Company fails to appoint Lindner's designees to the Board
initially or nominate them at any annual meeting, or (j) the Company fails to
provide notice of an Event of Default and the action the Company has taken or
proposes to take with respect to such Event of Default.
If an Event of Default occurs, the holders of a majority of the principal
amount of the Notes may declare the unpaid principal and accrued interest due
and payable and such principal and interest will be due and payable
immediately. If any Event of Default under (g) or (h) above occurs, the unpaid
principal amount and accrued interest will become immediately due and payable
without action by the holders of the Notes.
WARRANTS
The Warrants are exercisable for 1,500,000 shares of Common Stock at an
initial exercise price of $4.00 per share. The Warrants are exercisable until
May 31, 1998 and all Warrants are still outstanding and have not been
exercised. The anti-dilution provisions outlined in the above discussion of
the Notes also apply to the Warrants. The $4.00 per share exercise price
represents a premium to the market price of the Company's Common Stock at all
times from February 28, 1995 through May 25, 1995. On May 25, 1995 the last
sale price of the Company's Common Stock on NASDAQ was $3.5625.
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PROPOSAL TO APPROVE THE IRELAND AND TOMPKINS OPTION GRANTS
(PROPOSAL 4 ON PROXY CARD)
On May 25, 1995, the Company's Board of Directors approved a grant of
options to each of George R. Ireland and James B. Tompkins, subject to
stockholder approval. The Company is seeking the approval of the Company's
stockholders for the Ireland and Tompkins Option Grants in order to comply with
the requirements of the Bylaws of the National Association of Securities
Dealers, Inc. (the "NASD Bylaws"). Messrs. Ireland and Tompkins are the two
individuals designated by Lindner and approved by the Board of Directors to
serve on the Board on an interim basis until the annual meeting. Each of
Messrs. Ireland and Tompkins were granted options to purchase 100,000 shares of
Common Stock at an exercise price of $4.50 per share. The last sale price of a
share of Common Stock on NASDAQ on May 25, 1995 was $3.5625. All such options
are immediately exercisable and expire May 24, 1998, 30 days after the holder
ceases to be a director of the Company or one year after such holders death,
whichever occurs first. Mr. Ireland and Mr. Tompkins are nominees to serve on
the Board of Directors.
PROPOSAL TO APPROVE THE ERDAHL OPTION GRANT
(PROPOSAL 5 ON THE PROXY CARD)
On August 16, 1995, the Company's Board of Directors approved a grant of
options to Leland O. Erdahl, subject to stockholder approval. The Company is
seeking the approval of the Company's stockholders for the Erdahl Option Grant
in order to comply with the requirements of the NASD Bylaws. Mr. Erdahl was
granted options to purchase 100,000 shares of Common Stock at an exercise price
of $8.375 per share which was the fair market value of a share of Common Stock
on August 16, 1995. Such options are immediately exercisable and expire on May
24, 1998, 30 days after Mr. Erdahl ceases to be a director of the Company or
one year after his death, which occurs first. Mr. Erdahl is a nominee to serve
on the Board of Directors.
PROPOSAL TO APPROVE THE BCSC APPLICATION
(PROPOSAL 6 ON PROXY CARD)
The Company was originally incorporated under the laws of British
Columbia, Canada on August 20, 1984, under the name September Resources Ltd.
As a British Columbia corporation, the Company's Common Stock was listed on the
Vancouver Stock Exchange beginning December 18, 1987. On January 12, 1990, the
Company voluntarily delisted the Common Stock from the Vancouver Stock
Exchange.
However, the Company is still required, under the laws of British
Columbia, to make periodic reports to the British Columbia Securities
Commission (the "BCSC"). In order to eliminate the additional costs of
complying with the British Columbia securities law, the
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<PAGE> 39
Company has made an application (the "BCSC Application") with the BCSC for an
order that the Company no longer be required to make periodic reports to the
BCSC. BCSC requires that the BCSC Application be approved by the Company's
stockholders.
Upon approval of the BCSC Application by the Company's stockholders and by
the BCSC, the BCSC would issue such order and the Company would cease to be a
reporting issuer under British Columbia law. The Company would still be
subject to United States federal and state securities laws, and the Company's
Common Stock would continue to be listed on the Nasdaq national market system.
PROPOSAL TO RATIFY THE SELECTION
OF ARTHUR ANDERSEN, LLP AS AUDITORS
(PROPOSAL 7 ON PROXY CARD)
The Board of Directors voted to engage Arthur Andersen, LLP as independent
accountants to audit the accounts and financial statements of the Company for
the fiscal year ending December 31, 1995, and directed that such engagement be
submitted to the stockholders of the Company for ratification. In recommending
ratification by the stockholders of such engagement, the Board of Directors is
acting upon the recommendation of the Audit Committee, which has satisfied
itself as to the firm's professional competence and standing. Although
ratification by stockholders of the engagement of Arthur Andersen, LLP is not
required by Delaware corporate law or the Company's Certificate of
Incorporation or Bylaws, management feels a decision of this nature should be
made with the consideration of the Company's stockholders. If stockholder
approval is not received, management will reconsider the engagement.
It is expected that one or more representatives of Arthur Andersen, LLP
will be present at the Meeting and will be given the opportunity to make a
statement if they so desire. It also is expected that the representatives will
be available to respond to appropriate questions from the stockholders.
BOARD OF DIRECTORS' RECOMMENDATIONS; VOTE REQUIRED
The Board of Directors unanimously recommends a vote (i) FOR the election
as director of each of the nominees named in the proxy, (ii) FOR the approval
of the Stock Incentive Plan, (iii) FOR the approval of the Stock Issue
Transaction, (iv) FOR the approval of the Ireland and Tompkins Option Grants,
(v) FOR the approval of the Erdahl Option Grant, (vi) FOR the approval of the
BCSC Application, and (vii) FOR the ratification of the appointment of Arthur
Andersen, LLP as independent auditors.
The affirmative vote of the holders of (i) a plurality of the votes of the
outstanding shares of Common Stock present at the Meeting, either in person or
represented by proxy, is required to elect each nominee as a director and (ii)
a majority of the outstanding shares of Common
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<PAGE> 40
Stock present at the Meeting, either in person or represented by proxy, is
required to amend and restate the Employees' Plan, approve the Stock Issue
Transaction, approve the Ireland and Tompkins Options Grants, approve the
Erdahl Option Grant and approve the BCSC Application and to ratify the
appointment of Arthur Andersen, LLP.
COST AND METHOD OF PROXY SOLICITATION
The accompanying Proxy is being solicited on behalf of the Board of
Directors of the Company. All expenses for soliciting Proxies, including the
expense of preparing, printing and mailing the form of Proxy and the material
used in the solicitation thereof, will be borne by the Company. In addition to
the use of the mails, Proxies may be solicited by personal interview, telephone
and telegram by directors and regular officers and employees of the Company.
Such persons will receive no additional compensation for such services.
Arrangements may also be made with brokerage houses and other custodians,
nominees and fiduciaries for the forwarding of solicitation material to the
beneficial owners of stock held of record by such persons, and the Company may
reimburse them for reasonable out-of-pocket expenses incurred by them in
connection therewith.
ANNUAL REPORTS AND CONSOLIDATED FINANCIAL STATEMENTS
You are referred to the Company's annual report, including consolidated
financial statements, for the year ended December 31, 1994, enclosed herewith
for your information. The annual report is not incorporated in this Proxy
Statement and is not to be considered part of the soliciting material.
DEADLINE FOR RECEIPT OF STOCKHOLDER
PROPOSALS FOR 1996 ANNUAL MEETING
Any proposals that stockholders of the Company desire to have presented at
the 1996 Annual Meeting of Stockholders must be received by the Company at its
principal executive offices no later than March 10, 1996.
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UNDERTAKING TO PROVIDE DOCUMENTS
THE COMPANY WILL PROVIDE TO EACH PERSON TO WHOM A COPY OF THIS PROXY
STATEMENT IS DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON AND
THE PAYMENT OF A REASONABLE FEE, A COPY OF ANY EXHIBIT TO THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL
17, 1995. WRITTEN REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO LAURA GREIG,
URANIUM RESOURCES, INC., 12750 MERIT DRIVE, SUITE 1020, LB 12, DALLAS, TEXAS
75251, (214) 387-7777.
MISCELLANEOUS
The Board of Directors is not aware of any matter, other than the matters
described above, to be presented for action at the Meeting. However, if any
other business properly comes before the Meeting, the person or persons named
in the enclosed form of proxy will vote the proxy in accordance with his or
their best judgment on such matters.
DALLAS, TEXAS
November 16, 1995
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EXHIBIT A
URANIUM RESOURCES, INC.,
1995 STOCK INCENTIVE PLAN
1. General. This Stock Incentive Plan (the "Plan") provides
eligible employees of Uranium Resources, Inc., (the "Company") with the
opportunity to acquire or expand their equity interest in the Company by making
available for purchase Common Shares, par value $.001 per share, of the Company
("Common Shares"), through the granting of nontransferable options to purchase
Common Shares ("Stock Options"). It is intended that key employees may be
granted, simultaneously or from time to time, Stock Options that qualify as
incentive stock options ("Incentive Stock Options") under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") or Stock Options that do
not so qualify ("Non-qualified Stock Options"). No provision of the Plan is
intended or shall be construed to grant employees alternative rights in any
Incentive Stock Option granted under the Plan so as to prevent such Option from
qualifying under Section 422 of the Code.
2. Purpose of the Plan. The purpose of the Plan is to provide
continuing incentives to key employees of the Company and of any subsidiary
corporation of the Company, by encouraging such key employees to acquire new or
additional share ownership in the Company, thereby increasing their proprietary
interest in the Company's business and enhancing their personal interest in the
Company's success.
For purposes of the Plan, a "subsidiary corporation" consists of any
corporation at least fifty percent (50%) of the stock of which is directly or
indirectly owned or controlled by the Company.
3. Effective Date of the Plan. The Plan shall become effective
upon its adoption by the Board of Directors, subject to approval by holders of
a majority of the outstanding shares of voting capital stock of the Company.
If the Plan is not so approved within twelve (12) months after the date the
Plan is adopted by the Board of Directors, the Plan and any grants made
hereunder shall be null and void. However, if the Plan is so approved, no
further shareholder approval shall be required with respect to the making of
grants pursuant to the Plan, except as provided in Section 10 hereof.
4. Administration of the Plan. The Plan shall be administered by
the Compensation Committee of the Board of Directors of the Company, or by any
other committee selected by such Board of Directors by majority vote and
composed of no fewer than two (2) members of such Board of Directors (the
"Committee"). No person shall be appointed to the Committee who, during the
one-year period immediately preceding such person's appointment to the
Committee, has received any grants of Stock Options under the Plan or any
similar stock option or stock incentive plan, other than a formula-based plan,
maintained by the Company or any subsidiary corporation. A member of the
Committee shall not be eligible to participate in this Plan while serving on
the Committee.
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A majority of the Committee shall constitute a quorum. The acts of a
majority of the members present at any meeting at which a quorum is present (or
acts unanimously approved in writing by the members of the Committee) shall
constitute binding acts of the Committee.
Subject to the terms and conditions of the Plan, the Committee shall
be authorized and empowered:
(a) To select the key employees to whom grants may be made;
(b) To determine the number of Common Shares to be covered by any
Grant;
(c) To prescribe the terms and conditions of any grants made under
the Plan, and the form(s) and agreement(s) used in connection
with such grants, which shall include agreements governing the
granting of Stock Options;
(d) To determine the time or times when Stock Options will be
granted and when they will terminate in whole or in part;
(e) To determine the time or times when Stock Options that are
granted may be exercised;
(f) To determine, at the time a Stock Option is granted under the
Plan, whether such Option is an Incentive Stock Option
entitled to the benefits of Section 422 of the Code; and
(g) To establish any other Stock Option agreement provisions not
inconsistent with the terms and conditions of the Plan or,
where the Stock Option is an Incentive Stock Option, with the
terms and conditions of Section 422 of the Code.
5. Employees Eligible for Grants. Grants may be made from time
to time to those key employees of the Company or a subsidiary corporation, who
are designated by the Committee in its sole and exclusive discretion. Key
employees may include, but shall not necessarily be limited to, members of the
Board of Directors (excluding members of the Committee), and officers, of the
Company and any subsidiary corporation; however, Stock Options intended to
qualify as Incentive Stock Options shall only be granted to key employees while
actually employed by the Company or a subsidiary corporation. The Committee
may grant more than one Stock Option to the same key employee. No Stock Option
shall be granted to any key employee during any period of time when such key
employee is on a leave of absence.
6. Shares Subject to the Plan. The shares to be issued pursuant
to any Stock Option granted under the Plan shall be Common Shares. Either
Common Shares held as
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treasury stock, or authorized and unissued Common Shares, or both, may be so
issued, in such amount or amounts within the maximum limits of the Plan as the
Board of Directors shall from time to time determine.
Subject to the provisions of the next succeeding paragraph of this
Section 6 and the provisions of Section 7(h), the aggregate number of Common
Shares that can be actually issued under the Plan shall be seven hundred fifty
thousand (750,000) Common Shares.
If, at any time subsequent to the date of adoption of the Plan by the
Board of Directors, the number of Common Shares are increased or decreased, or
changed into or exchanged for a different number or kind of shares of stock or
other securities of the Company or of another corporation (whether as a result
of a stock split, stock dividend, combination or exchange of shares, exchange
for other securities, reclassification, reorganization, redesignation, merger,
consolidation, recapitalization or otherwise): (i) there shall automatically
be substituted for each Common Share subject to an unexercised Stock Option (in
whole or in part) granted under the Plan, the number and kind of shares of
stock or other securities into which each outstanding Common Share shall be
changed or for which each such Common Share shall be exchanged; and (ii) the
option price per Common Share or unit of securities shall be increased or
decreased proportionately so that the aggregate purchase price for the
securities subject to a Stock Option shall remain the same as immediately prior
to such event. In addition to the foregoing, the Committee shall be entitled
in the event of any such increase, decrease or exchange of Common Shares to
make other adjustments to the securities subject to a Stock Option, the
provisions of the Plan, and to any related Stock Option agreements (including
adjustments which may provide for the elimination of fractional shares), where
necessary to preserve the terms and conditions of any grants hereunder.
7. Stock Option Provisions.
(a) General. The Committee may grant to key employees (also
referred to as "optionees") nontransferable Stock Options that either qualify
as Incentive Stock Options under Section 422 of the Code or do not so qualify.
However, any Stock Option which is an Incentive Stock Option shall only be
granted within 10 years from the earlier of (i) the date this Plan is adopted
by the Board of Directors of the Company; or (ii) the date this Plan is
approved by the shareholders of the Company.
(b) Stock Option Price. The option price per Common Share which
may be purchased under an Incentive Stock Option under the Plan shall be
determined by the Committee at the time of Grant, but shall not be less than
one hundred percent (100%) of the fair market value of a Common Share,
determined as of the date such Option is granted; however, if a key employee to
whom an Incentive Stock Option is granted is, at the time of the grant of such
Option, an "owner," as defined in Section 422(b)(6) of the Code (modified as
provided in Section 424(d) of the Code) of more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or any
subsidiary
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corporation (a "Substantial Shareholder"), the price per Common Share of such
Option, as determined by the Committee, shall not be less than one hundred ten
percent (110%) of the fair market value of a Common Share on the date such
Option is granted. The option price per Common Share under each Stock Option
granted pursuant to the Plan which is not an Incentive Stock Option shall be
determined by the Committee at the time of Grant. Except as specifically
provided above, the fair market value of a Common Share shall be determined in
accordance with procedures to be established by the Committee. The day on
which the Committee approves the granting of a Stock Option shall be considered
the date on which such Option is granted.
(c) Period of Stock Option. The Committee shall determine when
each Stock Option is to expire. However, no Stock Option shall be exercisable
for a period of more than ten (10) years from the date upon which such Option
is granted. Further, no Incentive Stock Option granted to an employee who is a
Substantial Shareholder at the time of the grant of such Option shall be
exercisable after the expiration of (5) years from the date of grant of such
Option.
(d) Limitation on Exercise and Transfer of Stock Options. Only
the key employee to whom a Stock Option is granted may exercise such Option,
except where a guardian or other legal representative has been duly appointed
for such employee, and except as otherwise provided in the case of such
employee's death. No Stock Option granted hereunder shall be transferable by
an optionee other than by will or the laws of descent and distribution. No
Stock Option granted hereunder may be pledged or hypothecated, nor shall any
such Option be subject to execution, attachment or similar process.
(e) Employment, Holding Period Requirements For Certain Options.
The Committee may condition any Stock Option granted hereunder upon the
continued employment of the optionee by the Company or by a subsidiary
corporation, and may make any such Stock Option immediately exercisable.
However, the Committee will require that, from and after the date of grant of
any Incentive Stock Option granted hereunder until the day three (3) months
prior to the date such Option is exercised, such optionee must be an employee
of the Company or of a subsidiary corporation, but always subject to the right
of the Company or any such subsidiary corporation to terminate such optionee's
employment during such period. Each Stock Option shall be subject to such
additional restrictions as to the time and method of exercise as shall be
prescribed by the Committee. Upon completion of such requirements, if any, a
Stock Option or the appropriate portion thereof may be exercised in whole or in
part from time to time during the option period; however, such exercise
right(s) shall be limited to whole shares.
(f) Payment for Stock Option Price. A Stock Option shall be
exercised by an optionee giving written notice to the Company of his intention
to exercise the same, accompanied by full payment of the purchase price in cash
or by check, or, with the consent of the Committee, in whole or in part with a
promissory note or with a surrender of Common Shares having a fair market value
on the date of exercise equal to that portion of
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the purchase price for which payment in cash or check is not made. The
Committee may, in its sole discretion, approve other methods of exercise for a
Stock Option or payment of the option price, provided that no such method shall
cause any option granted under the Plan as an Incentive Stock Option to not
qualify under Section 422 of the Code, or cause any Common Share issued in
connection with the exercise of an option not to be a fully paid and
non-assessable Common Share.
(g) Certain Reissuances of Stock Options. To the extent Common
Shares are surrendered by an optionee in connection with the exercise of a
Stock Option in accordance with Section 7(f), the Committee may in its sole
discretion grant new Stock Options to such optionee (to the extent Common
Shares remain available for grants), subject to the following terms and
conditions:
(i) The number of Common Shares shall be equal to the
number of Common Shares being surrendered by the
optionee;
(ii) The option price per Common Share shall be equal to
the fair market value of Common Shares, determined on
the date of exercise of the Stock Options whose
exercise caused such Grant; and
(iii) The terms and conditions of such Stock Options shall
in all other respects replicate such terms and
conditions of the Stock Options whose exercise caused
such Grant, except to the extent such terms and
conditions are determined to not be wholly consistent
with the general provisions of this Section 7, or in
conflict with the remaining provisions of this Plan.
(h) Cancellation and Replacement of Stock Options and
Related Rights. The Committee may at any time or from time to time permit the
voluntary surrender by an optionee who is the holder of any outstanding Stock
Options under the Plan, where such surrender is conditioned upon the granting
to such optionee of new Stock Options for such number of shares as the
Committee shall determine, or may require such a voluntary surrender as a
condition precedent to the grant of new Stock Options. The Committee shall
determine the terms and conditions of new Stock Options, including the prices
at and periods during which they may be exercised, in accordance with the
provisions of this Plan, all or any of which may differ from the terms and
conditions of the Stock Options surrendered. Any such new Stock Options shall
be subject to all the relevant provisions of this Plan. The Common Shares
subject to any Stock Option so surrendered, shall no longer be charged against
the limitation provided in Section 6 of this Plan and may again become shares
subject to the Plan. The granting of new Stock Options in connection with the
surrender of outstanding Stock Options under this Plan shall be considered for
the purposes of the Plan as the granting of new Stock Options and not an
alteration, amendment or modification of the Plan or of the Stock Options being
surrendered.
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(i) Limitation on Exercisable Incentive Stock Options.
The aggregate fair market value of the Common Shares first becoming subject to
exercise as Incentive Stock Options by a key employee during any given calendar
year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). Such
aggregate fair market value shall be determined as of the date such Option is
granted, taking into account, in the order in which granted, any other
incentive stock options granted by the Company, or by a parent or subsidiary
thereof.
8. Termination of Employment. If a key employee ceases
to be an employee of the Company and every subsidiary corporation, for a reason
other than death, retirement, or permanent and total disability, his Stock
Options shall, unless extended by the Committee on or before his date of
termination of employment, terminate on the effective date of such termination
of employment. Neither the key employee nor any other person shall have any
right after such date to exercise all or any part of his Stock Options.
If termination of employment is due to death or permanent and
total disability, then outstanding Stock Options may be exercised within the
one (1) year period ending on the anniversary of such death or permanent and
total disability. In the case of death, such outstanding Stock Options shall
be exercised by such key employee's estate, or the person designated by such
key employee by will, or as otherwise designated by the laws of descent and
distribution. Notwithstanding the foregoing, in no event shall any Stock
Option be exercisable after the expiration of the option period, and in the
case of exercises made after a key employee's death, not to any greater extent
than the key employee would have been entitled to exercise such Option at the
time of his death.
Subject to the discretion of the Committee, in the event a key
employee terminates employment with the Company and all subsidiary corporations
because of normal or early retirement, any then-outstanding Stock Options held
by such key employee shall lapse at the earlier of the end of the term of such
Stock Option or three (3) months after such retirement or permanent and total
disability.
In the event an employee of the Company or one of its
subsidiary corporations is granted a leave of absence by the Company or such
subsidiary corporation to enter military service or because of sickness, his
employment with the Company or such subsidiary corporation shall not be
considered terminated, and he shall be deemed an employee of the Company or
such subsidiary corporation during such leave of absence or any extension
thereof granted by the Company or such subsidiary corporation.
9. Change of Control. Upon the occurrence of a Change
of Control (as defined below), notwithstanding any other provisions hereof or
of any agreement to the contrary, all Stock Options granted under this Plan
shall become immediately exercisable in full.
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For purposes of this Plan, a Change of Control shall be deemed
to have occurred if: (i) a tender offer shall be made and consummated for the
ownership of 25% or more of the outstanding voting securities of the Company;
(ii) the Company shall be merged or consolidated with another corporation and,
as a result of such merger or consolidation, less than 75% of the outstanding
voting securities of the surviving or resulting corporation shall be owned in
the aggregate by the former shareholders of the Company as the same shall have
existed immediately prior to such merger or consolidation; or (iii) the Company
shall sell substantially all of its assets to another corporation which is not
a wholly owned subsidiary; or (iv) a person, within the meaning of Section
3(a)(9) or of Section 13(d)(3) (as in effect on the date hereof) of the
Exchange Act, shall acquire, other than by reason of inheritance, fifty-one
percent (51%) or more of the outstanding voting securities of the Company
(whether directly, indirectly, beneficially or of record). In making any such
determination, transfers made by a person to an affiliate of such person (as
determined by the Board of Directors of the Company), whether by gift, devise
or otherwise, shall not be taken into account. For purposes of this Plan,
ownership of voting securities shall take into account and shall include
ownership as determined by applying the provisions of Rule 13d-3(d)(1)(i) as in
effect on the date hereof pursuant to the Exchange Act.
Notwithstanding the provisions of subparagraph (iv) of this
Section 9, "person" is used in that subparagraph shall not include any holder
who was the beneficial owner of more than ten percent (10%) of the voting
securities of the Company on the date the Plan was adopted by the Board of
Directors.
10. Amendments to Plan. The Committee is authorized to
interpret this Plan and from time to time adopt any rules and regulations for
carrying out this Plan that it may deem advisable. Subject to the approval of
the Board of Directors of the Company, the Committee may at any time amend,
modify, suspend or terminate this Plan. In no event, however, without the
approval of shareholders, shall any action of the Committee or the Board of
Directors result in:
(a) Materially amending, modifying or altering the
eligibility requirements provided in Section 5
hereof; or
(b) Materially increasing, except as provided in Section
6 hereof, the maximum number of shares subject to
Stock Options;
except to conform this Plan and any agreements made hereunder to changes in the
Code or governing law.
11. Investment Representation, Approvals and Listing.
The Committee may, if it deems appropriate, condition its grant of any Stock
Option hereunder upon receipt of the following investment representation from
the optionee:
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<PAGE> 49
"I agree that any Common Shares of Uranium Resources, Inc., which I
may acquire by virtue of this Stock Option shall be acquired for
investment purposes only and not with a view to distribution or
resale, and may not be transferred, sold, assigned, pledged,
hypothecated or otherwise disposed of by me unless (i) a registration
statement or post-effective amendment to a registration statement
under the Securities Act of 1933, as amended, with respect to said
Common Shares has become effective so as to permit the sale or other
disposition of said shares by me; or (ii) there is presented to
Uranium Resources, Inc., an opinion of counsel satisfactory to Uranium
Resources, Inc., to the effect that the sale or other proposed
disposition of said Common Shares by me may lawfully be made otherwise
than pursuant to an effective registration statement or post-effective
amendment to a registration statement relating to the said shares
under the Securities Act of 1933, as amended."
The Company shall not be required to issue any certificate or
certificates for Common Shares upon the exercise of any Stock Option granted
under this Plan prior to (i) the obtaining of any approval from any
governmental agency which the Committee shall, in its sole discretion,
determine to be necessary or advisable; (ii) the admission of such shares to
listing on any national securities exchange on which the Common Shares may be
listed; (iii) the completion of any registration or other qualifications of the
Common Shares under any state or federal law or ruling or regulations of any
governmental body which the Committee shall, in its sole discretion, determine
to be necessary or advisable or the determination by the Committee, in its sole
discretion, that any registration or other qualification of the Common Shares
is not necessary or advisable; and (iv) the obtaining of an investment
representation from the optionee in the form stated above or in such other form
as the Committee, in its sole discretion, shall determine to be adequate.
12. General Provisions. The form and substance of Stock
Option agreements made hereunder, whether granted at the same or different
times, need not be identical. Nothing in this Plan or in any agreement shall
confer upon any employee any right to continue in the employ of the Company or
any of its subsidiary corporations, to be entitled to any remuneration or
benefits not set forth in this Plan or such Grant, or to interfere with or
limit the right of the Company or any subsidiary corporation to terminate his
employment at any time, with or without cause. Nothing contained in this Plan
or in any Stock Option agreement shall be construed as entitling any optionee
to any rights of a shareholder as a result of the grant of a Stock Option,
until such time as Common Shares are actually issued to such optionee pursuant
to the exercise of such Option. This Plan may be assumed by the successors and
assigns of the Company. The liability of the Company under this Plan and any
sale made hereunder is limited to the obligations set forth herein with respect
to such sale and no term or provision of this Plan shall be construed to impose
any liability on the Company in favor of any employee with respect to any loss,
cost or expense which the employee may incur in connection with or arising out
of any transaction in connection with this Plan. The cash proceeds received by
the Company from the issuance of Common Shares pursuant to this Plan will be
used for general corporate purposes. The expense of administering this Plan
shall be borne by the Company. The captions and
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section numbers appearing in this Plan are inserted only as a matter of
convenience. They do not define, limit, construe or describe the scope or
intent of the provisions of this Plan.
13. Termination of This Plan. This Plan shall terminate
on October 11, 2005, and thereafter no Stock Options shall be granted
hereunder. All Stock Options outstanding at the time of termination of
this Plan shall continue in full force and effect according to their terms and
the terms and conditions of this Plan.
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URANIUM RESOURCES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDER
TO BE HELD ON DECEMBER 19, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Uranium Resources, Inc. (the "Company")
hereby constitutes and appoints Paul K. Willmott, George R. Ireland, James B.
Tompkins and Leland O. Erdahl, or any of them acting singly, each with the
power of substitution as attorneys and proxies to vote all of the shares which
the undersigned is entitled to vote at the Annual Meeting of Stockholders of
the Company to be held at the offices of Baker & Hostetler, 303 East 17th
Avenue, Suite 1100, Denver, Colorado 80203 on Tuesday, December 19, 1995, at
8:00 a.m., local time, and at any and all adjournments thereof, with the same
force and effect as if the undersigned were personally present, and the
undersigned hereby instructs the above-named Attorneys and Proxies to vote as
follows:
1. ELECTION OF DIRECTORS. The following four persons have been nominated
to serve on the Company's Board of Directors: Paul K. Willmott,
George R. Ireland, James B. Tompkins and Leland O. Erdahl. George R.
Ireland and James B. Tompkins, two of the nominees, are the designees
of Lindner Investments (on behalf of its Lindner Bulwark Fund) and
Lindner Dividend Fund, Inc. (together hereinafter referred to as
"Lindner"). Pursuant to an agreement with Lindner, discussed in the
accompanying Proxy Statement, the Company has agreed to nominate two
designees of Lindner.
/ / FOR all nominees listed above / / WITHHOLD AUTHORITY
to vote for all nominees
listed above
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY ONE OR MORE
INDIVIDUAL NOMINEES, WRITE THE NAME OF EACH SUCH NOMINEE IN THE SPACE PROVIDED
BELOW.)
2. 1995 STOCK INCENTIVE PLAN. Proposal to approve the adoption of the
Company's 1995 Stock Incentive Plan:
/ / FOR / / AGAINST / / ABSTAIN
(OVER)
<PAGE> 52
3. STOCK ISSUE TRANSACTION. Proposal to approve the issuance of up to
3,000,000 shares of the Company's Common Stock, $0.001 par value per
share, issuable upon conversion of 6.5% secured convertible notes and
exercise of warrants currently held by Lindner Investments and Lindner
Dividend Fund, Inc. If the notes are fully converted and the warrants
fully exercised, the Lindner Group would own beneficially 34.8% of the
outstanding Common Stock of the Company. The Lindner Group may be
deemed a controlling stockholder of the Company.
/ / FOR / / AGAINST / / ABSTAIN
4. OPTION GRANTS. Proposal to approve the grant of options to purchase
100,000 shares of the Company's Common Stock to each of George R.
Ireland, James B. Tompkins and Leland O. Erdahl:
/ / FOR / / AGAINST / / ABSTAIN
5. BCSC APPLICATION. Proposal to approve an application for an order of
the British Columbia Securities Commission (the "BCSC") that the
Company no longer be required to make periodic reports to the BCSC:
/ / FOR / / AGAINST / / ABSTAIN
6. RATIFICATION OF ARTHUR ANDERSEN. Proposal to ratify the selection of
Arthur Andersen, LLP, independent accountants, as the independent
auditors of the Company for the fiscal year ending December 31, 1995:
/ / FOR / / AGAINST / / ABSTAIN
7. OTHER BUSINESS. In their discretion, the proxies are authorized to
vote upon such other business as may properly come before the Meeting
or any adjournment of adjournments thereof.
<PAGE> 53
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE NOMINEES SET FORTH IN PROPOSAL 1 AND FOR PROPOSALS 2, 3, 4, 5 and
6.
DATED:____________________________, 1995
________________________________________
(Signature)
________________________________________
(Signature)
NOTE: Please sign exactly as your name
or names appear on this card. Joint
owners should each sign personally.
When signing as attorney, executor,
administrator, personal representative,
trustee or guardian, please give your
full title as such. For a corporation
or a partnership, please sign in the
full corporate name by the President or
other authorized officer or the full
partnership name by an authorized
person, as the case may be. (Please
mark, sign, date, and return this proxy
in the enclosed envelope.)
