-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FuLLIPUm9qhQhQCz4BRiB6vYpVUuqDJL8hFb8bUKqfbsa3iMmcICdkYgxAILeYFE v6w8mSU8o95Rla5rVthe8g== 0000912057-97-014489.txt : 19970430 0000912057-97-014489.hdr.sgml : 19970430 ACCESSION NUMBER: 0000912057-97-014489 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19970429 SROS: NASD GROUP MEMBERS: COOK INLET REGION INC GROUP MEMBERS: NORTH PACIFIC MINING CORPORATION GROUP MEMBERS: PEAK ALASKA VENTURES, INC. GROUP MEMBERS: PEAK OILFIELD SERVICE COMPANY SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: USMX INC CENTRAL INDEX KEY: 0000315523 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 841076625 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-32149 FILM NUMBER: 97589682 BUSINESS ADDRESS: STREET 1: 141 UNION BLVD STE 100 CITY: LAKEWOOD STATE: CO ZIP: 80228 BUSINESS PHONE: 3039854665 MAIL ADDRESS: STREET 1: 141 UNION BLVD SUITE 100 CITY: LAKEWOOD STATE: CO ZIP: 80228 FORMER COMPANY: FORMER CONFORMED NAME: U S MINERALS EXPLORATION CO DATE OF NAME CHANGE: 19880222 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: COOK INLET REGION INC CENTRAL INDEX KEY: 0000024363 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 920042304 STATE OF INCORPORATION: AK FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 2525 C STREET CITY: ANCHORAGE STATE: AK ZIP: 99503 BUSINESS PHONE: 907-274-8638 MAIL ADDRESS: STREET 2: 2525 C STREET CITY: ANCHORAGE STATE: AK ZIP: 99503 SC 13D 1 SC 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. )* USMX, INC. (Name of Issuer) Common Stock, $.001 Par Value Per Share (Title of Class of Securities) 903366 10 2 ----------- (CUSIP Number) Mark W. Kroloff Cook Inlet Region, Inc. 2525 "C" Street Anchorage, Alaska 99503 (907) 274-8638 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) July 11, 1996 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]. Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Page 2 of 15 Pages SCHEDULE 13D CUSIP No. 903366 10 2 1 Name Of Reporting Person S.S. Or I.R.S. Identification No. Of Above Person Cook Inlet Region, Inc. 92-0042304 2 Check The Appropriate Box If A Member Of A Group* (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 Source Of Funds* OO 5 Check Box If Disclosure Of Legal Proceedings Is Required Pursuant To Items 2(d) Or 2(e) [ ] 6 Citizenship Or Place Of Organization Alaska corporation 7 Number Of Shares Beneficially Owned By Each Reporting Person With Sole Voting Power 0 8 Number Of Shares Beneficially Owned By Each Reporting Person With Shared Voting Power 2,540,663 9 Number Of Shares Beneficially Owned By Each Reporting Person With Sole Dispositive Power 0 10 Number Of Shares Beneficially Owned By Each Reporting Person With Shared Dispositive Power 2,540,663 11 Aggregate Amount Beneficially Owned By Each Reporting Person 2,540,663 12 Check Box If The Aggregate Amount In Row (11) Excludes Certain Shares* [ ] 13 Percent Of Class Represented By Amount In Row (11) 14.8% 14 Type Of Reporting Person* CO * SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. Page 3 of 15 Pages SCHEDULE 13D CUSIP No. 903366 10 2 1 Name Of Reporting Person S.S. Or I.R.S. Identification No. Of Above Person North Pacific Mining Corporation 92-0129285 2 Check The Appropriate Box If A Member Of A Group* (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 Source Of Funds* OO 5 Check Box If Disclosure Of Legal Proceedings Is Required Pursuant To Items 2(d) Or 2(e) [ ] 6 Citizenship Or Place Of Organization Alaska corporation 7 Number Of Shares Beneficially Owned By Each Reporting Person With Sole Voting Power 0 8 Number Of Shares Beneficially Owned By Each Reporting Person With Shared Voting Power 1,540,663 9 Number Of Shares Beneficially Owned By Each Reporting Person With Sole Dispositive Power 0 10 Number Of Shares Beneficially Owned By Each Reporting Person With Shared Dispositive Power 1,540,663 11 Aggregate Amount Beneficially Owned By Each Reporting Person 1,540,663 12 Check Box If The Aggregate Amount In Row (11) Excludes Certain Shares* [ ] 13 Percent Of Class Represented By Amount In Row (11) 9.5% 14 Type Of Reporting Person* CO * SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. Page 4 of 15 Pages SCHEDULE 13D CUSIP No. 903366 10 2 1 Name Of Reporting Person S.S. Or I.R.S. Identification No. Of Above Person Peak Oilfield Service Company 92-0123001 2 Check The Appropriate Box If A Member Of A Group* (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 Source Of Funds* OO 5 Check Box If Disclosure Of Legal Proceedings Is Required Pursuant To Items 2(d) Or 2(e) [ ] 6 Citizenship Or Place Of Organization Partnership organized under the laws of Alaska. 7 Number Of Shares Beneficially Owned By Each Reporting Person With Sole Voting Power 0 8 Number Of Shares Beneficially Owned By Each Reporting Person With Shared Voting Power 1,000,000 9 Number Of Shares Beneficially Owned By Each Reporting Person With Sole Dispositive Power 0 10 Number Of Shares Beneficially Owned By Each Reporting Person With Shared Dispositive Power 1,000,000 11 Aggregate Amount Beneficially Owned By Each Reporting Person 1,000,000 12 Check Box If The Aggregate Amount In Row (11) Excludes Certain Shares* [ ] 13 Percent Of Class Represented By Amount In Row (11) 5.8% 14 Type Of Reporting Person* PN * SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. Page 5 of 15 Pages SCHEDULE 13D CUSIP No. 903366 10 2 1 Name Of Reporting Person S.S. Or I.R.S. Identification No. Of Above Person Peak Alaska Ventures, Inc. 92-0121382 2 Check The Appropriate Box If A Member Of A Group* (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 Source Of Funds* OO 5 Check Box If Disclosure Of Legal Proceedings Is Required Pursuant To Items 2(d) Or 2(e) [ ] 6 Citizenship Or Place Of Organization Alaska corporation 7 Number Of Shares Beneficially Owned By Each Reporting Person With Sole Voting Power 0 8 Number Of Shares Beneficially Owned By Each Reporting Person With Shared Voting Power 1,000,000 9 Number Of Shares Beneficially Owned By Each Reporting Person With Sole Dispositive Power 0 10 Number Of Shares Beneficially Owned By Each Reporting Person With Shared Dispositive Power 1,000,000 11 Aggregate Amount Beneficially Owned By Each Reporting Person 1,000,000 12 Check Box If The Aggregate Amount In Row (11) Excludes Certain Shares* [ ] 13 Percent Of Class Represented By Amount In Row (11) 5.8% 14 Type Of Reporting Person* CO * SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. Page 6 of 15 Pages ITEM 1. SECURITY AND ISSUER This statement relates to shares of common stock, $.001 par value per share ("Common Stock") of USMX, Inc. (the "Issuer"), 141 Union Boulevard, Suite 100, Lakewood, Colorado 80228. ITEM 2. IDENTITY AND BACKGROUND (a)-(b) This statement is filed by: Cook Inlet Region, Inc., an Alaska corporation ("CIRI"). CIRI's principal business address is 2525 "C" Street, Anchorage, Alaska 99503. North Pacific Mining Corporation, an Alaska corporation ("NPMC"), which is a wholly owned subsidiary of CIRI. NPMC's principal business address is 2525 "C" Street, Anchorage, Alaska 99503. Peak Oilfield Service Company ("Peak"), a partnership organized under Alaskan law. CIRI is one of two general partners of Peak. Peak's principal business address is 2525 "C" Street, Anchorage, Alaska, 99503. Peak Alaska Ventures, Inc., an Alaska corporation ("Ventures"), which is a wholly owned subsidiary of CIRI. Ventures' principal business address is 2525 "C" Street, Anchorage, Alaska, 99503. CIRI, NPMC, Peak, and Ventures are herein referred to collectively as the "Reporting Persons." The Executive Officers and Directors of CIRI are as follows: EXECUTIVE OFFICERS Chairman Roy M. Huhndorf President and Chief Executive Officer Carl H. Marrs Vice President Craig A. Floerchinger Vice President Mark W. Kroloff Vice President Barbara A. Donatelli Vice President Kirk S. McGee Vice President Gerald G. Booth Vice President R. Dennis Brandon The business address of the executive officers listed above is 2525 "C" Street, Anchorage, Alaska 99503. DIRECTORS Roy M. Huhndorf, Chairman Charles G. Anderson B. Agnes Brown Gerald G. Brown Allan R. Chase, Sr. John N. Colberg Gosta E. Dagg William D. English A. Debbie Fullenwider Patrick M. Marrs Emil Notti William C. Prosser Robert W. Rude Page 7 of 15 Pages Clare Swan Robert N. Woodhead The business address of the directors listed above is 2525 "C" Street, Anchorage, Alaska 99503. The Executive Officers and Directors of NPMC are as follows: EXECUTIVE OFFICERS Chairman Roy M. Huhndorf President Gerald G. Booth Vice President Kirk S. McGee Secretary/Treasurer William D. English The business address of the executive officers listed above is 2525 "C" Street, Anchorage, Alaska 99503. DIRECTORS Ray M. Huhndorf, Chairman Gerald G. Booth Kirk S. McGee William D. English John N. Colberg The business address of the directors listed above is 2525 "C" Street, Anchorage, Alaska 99503. The Executive Officers and members of the Partnership Board ("Members") of Peak are as follows: EXECUTIVE OFFICERS President Michael O'Connor The business address of the executive officer listed above is 2525 "C" Street, Anchorage, Alaska, 99503. MEMBERS OF THE PARTNERSHIP BOARD Gerald G. Booth Carl H. Marrs Eugene Isenberg Richard A. Stratton The business address of Mr. Booth and Mr. Marrs is 2525 "C" Street, Anchorage, Alaska, 99503. The business address of Mr. Isenberg and Mr. Stratton is 515 W. Greens Road, Suite 1200, Houston, Texas 77067. The general partners of Peak are Peak Alaska Ventures, Inc. and Nabors Alaska Services Corp. ("Nabors Services"), a wholly owned subsidiary of Nabors Industries, Inc. ("Nabors"). Nabors and Nabors Services are both unaffiliated with CIRI. The Executive Officers and Directors of Ventures are as follows: EXECUTIVE OFFICERS Chairman Carl H. Marrs President Gerald G. Booth Treasurer Judith A. Bandel Assistant Treasurer Craig G. Floerchinger Assistant Secretary Mark Kroloff Page 8 of 15 Pages The business address of the executive officers listed above is 2525 "C" Street, Anchorage, Alaska, 99503. DIRECTORS Carl H. Marrs, Chairman Gerald G. Booth Roy M. Huhndorf William C. Prosser Allan R. Chase, Sr. The business address of the directors listed above is 2525 "C" Street, Anchorage, Alaska, 99503. The Executive Officers and Directors of Nabors Services are as follows: EXECUTIVE OFFICERS President Richard A. Stratton Vice President, Secretary and Treasurer Mark Lindsey The business address of Mr. Stratton is 515 W. Greens Road, Suite 1200, Houston, Texas, 77067. The business address of Mr. Lindsey is 4300 "B" Street, Suite 600, Anchorage, Alaska, 99503. DIRECTORS Richard A. Stratton Mark Lindsey The business address of the directors listed above is as set forth under the immediately preceding heading "Executive Officers". The Executive Officers and Directors of Nabors are as follows: EXECUTIVE OFFICERS Chairman and Chief Executive Eugene Isenberg Officer Vice Chairman Richard A. Stratton President and Chief Operating Officer Anthony G. Petrello Vice President, Administration and Daniel McLachlin Secretary Vice President, Finance Bruce Koch The business address of the executive officers listed above is 515 W. Greens Road, Suite 1200, Houston, Texas, 77067. DIRECTORS Eugene Isenberg Anthony G. Petrello Hans W. Schmidt Richard A. Stratton Page 9 of 15 Pages The business address of the directors listed above is 515 W. Greens Road, Suite 1200, Houston, Texas, 77067. The following directors have the business addresses immediately following their respective names: Gary T. Hurford, Hunt Oil Company, Fountain Place, 1445 Ross at Field, Dallas, TX 75202-2785. Myron M. Sheinfeld, Sheinfeld, Maley & Kay, 3700 First City Tower, Houston, TX 77002. Jack Wexler, 205 Oceanway, Vero Beach, FL 32963. Martin J. Whitman, 767 Third Avenue, New York, New York 10017-2023. (c) Cook Inlet Region, Inc. is one of the 12 regional corporations established by Congress under the terms of the Alaskan Native Claims Settlement Act of 1971. The principal lines of business of CIRI are oil field services, natural resource development and real estate. The principal business of North Pacific Mining Corporation is natural resource development. The principal business of Peak Oilfield Service Company is to conduct oil and gas field related maintenance, service, and support and construction activities. The principal business of Ventures is to provide construction and maintenance related services to oil companies. Nabors is a land drilling contractor providing contract drilling and other oilfield services on a worldwide basis. Nabors actively markets over 370 land drilling and 75 land well service rigs. Offshore, Nabors operates 25 platform rigs (including two under construction), six jack-up and five barge rigs. Nabors is a participant in most of the significant oil, gas and geothermal drilling markets in the world. Complementing its drilling and workover services, Nabors provides comprehensive oilfield engineering, civil construction, logistics and management services. Nabors is a holding company with investments in oilfield services entities. The present principal occupations of the officers and directors of CIRI, Ventures, and NPMC are as follows: Charles G. Anderson, proprietor, Charles Anderson & Associates. Judith A. Bandel, Controller, Cook Inlet Region, Inc. Gerald G. Booth, Vice President, Energy & Minerals, Cook Inlet Region, Inc. R. Dennis Brandon, Vice President, Tourism, Cook Inlet Region, Inc. B. Agnes Brown, President, Arctic Tug & Barge, Co, Inc. and President, Kaloa & Company, Inc. Gerald G. Brown, President, Alaska Supply, Inc. Page 10 of 15 Pages Allan R. Chase, self employed, property management. John N. Colberg, Retired Chairman, Cook Inlet Region, Inc. Gosta E. Dagg, Attorney, Private Practice. Barbara A. Donatelli, Vice President, Administration, Cook Inlet Region, Inc. William D. English, Vice President and Director, Northern Television, Inc. Craig Floerchinger, Vice President, Finance and Assistant Treasurer, Cook Inlet Region, Inc. A. Debbie Fullenwider, Public Relations, Federal Emergency Management Agency, Region X. Roy M. Huhndorf, Chairman, Cook Inlet Region, Inc. Mark W. Kroloff, Vice President, General Counsel and Assistant Secretary, Cook Inlet Region, Inc. Carl H. Marrs, President and Chief Operating Officer, Cook Inlet Region, Inc. Patrick M. Marrs, Owner and President, Communications North, Inc. Kirk S. McGee, Vice President, Real Estate, Cook Inlet Region, Inc. Emil Notti, President, Alaska Native Foundation. William C. Prosser, Managing Partner, Huffman Hills Development Company. Robert W. Rude, currently unemployed. Clare Swan, Tribal Chair and Executive Director, Kenaitze Indian Tribe. Robert N. Woodhead, Meter Technician and Journeyman Lineman, Chugach Electric Association. The present principal occupation of the officers and directors of Peak, who are not otherwise identified herein, are as follows: Michael O'Connor, President, Peak Oilfield Service Company. The present principal occupation of the officers and directors of Nabors and Nabors Services are as follows: Gary T. Hurford, President of Hunt Oil Company. Eugene M. Isenberg, Chairman of the Board and Chief Executive Officer of Nabors. Bruce P. Koch, Vice President, Finance and Controller of Nabors. Mark Lindsey, Vice President, Secretary and Treasurer of Nabors Services; Vice President - Finance, Nabors Alaska Drilling, Inc. Daniel McLachlin, Vice President, Administration and Corporate Secretary of Nabors. Page 11 of 15 Pages Anthony G. Petrello, President and Chief Operating Officer of Nabors. Hans W. Schmidt, Retired President of Deutag Drilling, a subsidiary of C. Deilman A.G. Myron M. Sheinfeld, Counsel to the law firm of Sheinfeld, Maley & Kay, a professional corporation located in Houston, Texas. Richard A. Stratton, Vice Chairman of the Board of Directors of Nabors. Jack Wexler, international business consultant. Martin J. Whitman, Chairman of Danielson Holding Corporation (a financial services holding company); Chairman of Third Avenue Trust (a registered investment company); Chief Executive Officer of M.J. Whitman, Inc. (a broker-dealer). (d) None of the persons on whose behalf this Schedule 13D is filed, nor, to the best knowledge of the persons filing this Schedule 13D, any of the officers, directors or Members of such persons set forth above, have been convicted, during the last five years, in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) None of the persons on whose behalf this Schedule 13D is filed, nor, to the best knowledge of the persons filing this Schedule 13D, any of the officers, directors or Members of such persons set forth above, have, during the last five years, been party to a civil proceeding resulting in a judgment, decree or final order relating to any violation of federal or state securities laws. (f) To the best knowledge of the persons filing this Schedule 13D, each of the officers, directors or Members of the persons filing this Schedule 13D listed above are citizens of the United States. (d-f) During the last five years, none of Nabors, Nabors Services nor, to the best knowledge of Nabors and Nabors Services, as applicable, any director or executive officer of Nabors or Nabors Services has been (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) a party to a civil proceeding or a judicial or administrative body of competent jurisdiction and as a result of such proceeding has been or is subject to a judgment, decree of final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. All of the individuals listed above for Nabors and Nabor Services are U.S. citizens, except Mr. Schmidt who is a citizen of Germany. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION USMX acquired leasehold and other property interests in a mining project (the Illinois Creek Project) from NPMC in consideration for 1,540,663 shares of Common Stock and approximately $100,000. This transaction is described in further detail in response to Item 4. A dispute has arisen with respect to certain obligations to Peak by USMX arising from a construction contract related to the Illinois Creek Project. The shares of stock are to be issued to Peak in connection with the settlement of these obligations. This transaction is described in further detail in response to Item 4. Page 12 of 15 Pages ITEM 4. PURPOSE OF TRANSACTION As previously disclosed in the Current Report on Form 8-K filed by USMX on July 26, 1996, and in various other reports and registration statements subsequently filed by USMX with the Securities and Exchange Commission, USMX issued 1,540,663 shares of its Common Stock to North Pacific Mining Corporation ("NPMC") on July 11, 1996 in partial payment for USMX's acquisition from NPMC of certain leasehold and other property interests in the Illinois Creek Project in north central Alaska pursuant to the terms of an acquisition agreement (the "Agreement") entered into by and between USMX and NPMC effective December 16, 1994, as amended on February 5, 1996. Pursuant to the terms of the Agreement, USMX elected to pay the approximately $4 million purchase price for the Illinois Creek Project in stock, rather than cash. The number of shares issued to NPMC was determined based upon the average market price of the Common Stock on The NASDAQ Stock Market as calculated in accordance with the provisions of the Agreement. As a result of the foregoing transaction, NPMC owns approximately 9.5% of USMX's issued and outstanding Common Stock. In accordance with the provisions of the Agreement, USMX filed a Registration Statement with the Securities and Exchange Commission permitting NPMC to sell its shares of the Common Stock. The Registration Statement was declared effective by the Securities and Exchange Commission in July, 1996, but no sales of any of the shares of the Common Stock held by NPMC have yet occurred. USMX has agreed to use its best efforts to keep that Registration Statement effective until NPMC has sold all of its shares of the Common Stock or until June 1999. Under the terms of the Agreement, NPMC has various royalty and other rights with respect to the Illinois Creek Project. The text of the Agreement is being filed herewith as Exhibit 1 and is hereby incorporated in full by reference. USMX and Peak entered into an "Erection and Installation Contract, C-96-0302" dated June 11, 1996 (the "Contract") related to the installation and construction of certain improvements on land and mining claims in Alaska. A dispute has arisen between Peak and USMX with respect to payment of, and the amount owed to Peak, pursuant to the Contract. In order to resolve these disputes, Peak, USMX and Dakota Mining Corporation ("Dakota") entered into a binding Letter Agreement dated April 22, 1997. Dakota is a party to the Letter Agreement because it has entered into an agreement pursuant to which a subsidiary of Dakota will merge with USMX. The Letter Agreement provides for the payment of certain cash amounts by USMX and the issuance of 1,000,000 shares of Common Stock of USMX to Peak immediately prior to the consummation of the merger of USMX and a subsidiary of Dakota and after approval of the shareholders of each of USMX and Dakota. If the merger is not consummated prior to June 15, 1997, then USMX will have the right for a sixty day period to settle the disputed claims by paying Peak a cash amount, and no shares of USMX would be issued. If the payment is not made, Peak may obtain a judgment against USMX for $2,782,396 or may rescind the Letter Agreement, in which event Peak could reassert its original claims, and USMX could reassert its objections to such claims. A definitive settlement agreement is being negotiated between the parties. As a result of the foregoing transaction, Peak beneficially owns approximately 5.8% of USMX's issued and outstanding Common Stock. The text of the Letter Agreement is being filed herewith as Exhibit 3 and is hereby incorporated in full by reference. While CIRI, NPMC and Peak have no present plans to purchase additional shares of Common Stock in the open market or otherwise, they could determine to do so depending upon price, market conditions, availability of funds, evaluation of alternative investments and other factors. While none of the Reporting Persons have any present plans to sell any of shares of Common Stock held by them, they could determine, based upon the same set of factors listed above with respect to purchases, to sell some or all of the shares held Page 13 of 15 Pages by them. USMX and Dakota have announced plans for a subsidiary of Dakota to merge with USMX, and if the merger is consummated, the shares of Common Stock owned by NPMC and to be issued to Peak would be converted into shares of Dakota Common Stock in accordance with the terms of the merger agreement. NPMC will determine how it will vote its shares of Common Stock with respect to the proposed merger after reviewing the proxy materials to be circulated by USMX. The shares to be acquired by Peak will not be held on the record date set for the vote with respect to such merger, and therefore will not be eligible to vote on the merger. NPMC and the Issuer are parties to a Registration Rights Agreement as described under Item 6 below. The Letter Agreement among Peak, Dakota and USMX provides for certain registration rights as described in Item 6. Other than as discussed above, the persons filing this Schedule have no plans or proposals that relate to or would result in the acquisition by any person of additional securities of Issuer or the disposition of securities of Issuer; an extraordinary corporate transaction involving Issuer or any of its subsidiaries; a sale or transfer of a material amount of assets of Issuer or any of its subsidiaries; a change in the present Board of Directors or management of Issuer; a material change in the present capitalization or dividend policy of Issuer; any other material change in Issuer's business or corporate structure; changes in Issuer's charter or bylaws or other actions that might impede the acquisition of control of Issuer by any other person; causing securities of Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an interdealer quotation system of a registered national securities association; causing securities of Issuer to be eligible for termination of registration pursuant to the Securities Exchange Act of 1934; or any other similar action. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER (a) NPMC is the holder and beneficial owner of 1,540,663 shares of Common Stock, representing 9.5% of the outstanding shares of Common Stock of Issuer. Peak has the right to acquire ownership of 1,000,000 shares of Common Stock, representing 5.8% of the outstanding shares of Common Stock of Issuer. CIRI controls NPMC and thus may be considered to have beneficial ownership of such shares. Ventures, a wholly owned subsidiary of CIRI, is a general partner of Peak and thus Ventures and CIRI may be considered to have beneficial ownership of the shares owned by Peak. (b) CIRI shares voting and investment power with respect to the 1,540,663 shares held by NPMC, and CIRI and Ventures share voting power with Nabor and Nabors Services, with respect to the 1,000,000 shares that may be acquired by Peak. (c) On April 22, 1997, Peak, USMX and Dakota entered into a Letter Agreement pursuant to which Peak, in settlement of a dispute with USMX, will acquire 1,000,000 shares of Common Stock of USMX upon the satisfaction of certain conditions. The transaction is described above in Item 4. (d) Not applicable. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER Registration Rights Agreement Page 14 of 15 Pages NPMC and Issuer are parties to a Registration Rights Agreement dated as of December 16, 1994. Pursuant to the Registration Rights Agreement, Issuer has agreed, under certain conditions and subject to certain limitations, to use its reasonable efforts to effect the registration under the Securities Act of 1933 (the "1933 Act") of the shares of Common Stock held by NPMC. A Registration Statement with respect to these shares has been declared effective by the Securities and Exchange Commission. USMX has agreed to use its best efforts to keep this Registration Statement effective until NPMC has sold these shares or until June 1999. NPMC may demand up to two additional registrations during the four years subsequent to June 1999. In addition, the Issuer will use its reasonable efforts to include, upon request, registrable shares in a registration of Common Stock under the 1933 Act by the Issuer on a registration form and in a manner that would permit registration of registrable shares for sale to the public, subject to certain limitations. The Issuer has agreed to pay all expenses of registration. The Issuer and NPMC have agreed to customary indemnification and contribution provisions for certain liabilities relating to the registration of the Common Stock. USMX, Dakota and Peak are parties to a Letter Agreement as described above in Item 4. Pursuant to the Letter Agreement, Dakota has agreed, under certain conditions and subject to certain limitations, to use its reasonable efforts to effect the registration under the 1933 Act of the shares of Common Stock of Dakota that will be held by Peak upon the conversion of the shares of USMX stock issuable to Peak pursuant to the Letter Agreement in the merger. Dakota has agreed to use its best efforts to keep this Registration Statement effective until Peak may sell such shares without restriction. Dakota has agreed to pay all expenses of the registration, and Peak has agreed to reimburse Dakota for no more than $25,000 of expenses. A definitive settlement agreement, that will contain additional details with respect to the registration rights, is being negotiated between the parties. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS 1. Agreement dated December 16, 1994 between North Pacific Mining Corporation and USMX, Inc. 2. Amendment to Agreement dated February 5, 1996 among North Pacific Mining Corporation and USMX, Inc. 3. Letter Agreement dated April 22, 1997 among Dakota Mining Corporation, USMX, Inc. and Peak Mining Corporation. Page 15 of 15 Pages SIGNATURE After reasonable inquiry and to the best knowledge and belief of each, the undersigned hereby certify that the information set forth in this statement is true, complete and correct. Dated this 29th day of April, 1997. COOK INLET REGION, INC.* By: /s/ ------------------------------- Mark W. Kroloff Vice President NORTH PACIFIC MINING CORPORATION By: /s/ ------------------------------- Mark W. Kroloff Assistant Secretary PEAK OILFIELD SERVICE COMPANY By: /s/ ------------------------------- Michael O'Connor President PEAK ALASKA VENTURES, INC. By: /s/ ------------------------------- Mark W. Kroloff Assistant Secretary *In executing and filing this Schedule 13D, Cook Inlet Region, Inc. does not intend to waive the exemption afforded it under 43 U.S.C. Section 1625. EX-1 2 EXHIBIT 1 - AGREEMENT EXHIBIT 1 AGREEMENT Between NORTH PACIFIC MINING CORPORATION, an Alaska corporation and USMX, INC., a Delaware corporation Dated Effective December 16, 1994 TABLE OF CONTENTS R E C I T A L S.............................................................. 1 1. DEFINITIONS.............................................................. 1 1.1 "ADVANCE MINIMUM ROYALTY"........................................... 1 1.2 "AFFILIATE"......................................................... 2 1.3 "AGREEMENT"......................................................... 2 1.4 "AIDEA REIMBURSEMENT AGREEMENT"..................................... 2 1.5 "APPROVALS"......................................................... 2 1.6 "AREA OF INTEREST".................................................. 2 1.7 "CIRI".............................................................. 2 1.8 "COMMERCIAL PRODUCTION"............................................. 3 1.9 "DEVELOP" or "DEVELOPMENT".......................................... 3 1.10 "EFFECTIVE DATE".................................................... 3 1.11 "EQUIPMENT AND FIXTURES"............................................ 3 1.12 "EXPLORATION" or "EXPLORE".......................................... 4 1.13 "FEASIBILITY REPORT"................................................ 4 1.14 "LEASE(S)".......................................................... 7 1.15 "LETTER AGREEMENT".................................................. 7 1.16 "MINERALS".......................................................... 7 1.17 "MINING" or "MINE".................................................. 7 1.18 "MINING VENTURE AGREEMENT".......................................... 8 1.19 "NET RETURNS ROYALTY"............................................... 8 1.20 "NOTICE" or "NOTIFY"................................................ 8 1.21 "OPERATING STIPULATIONS"............................................ 8 1.22 "OPERATIONS"........................................................ 8 1.23 "PRODUCTION DECISION"............................................... 8 1.24 "PROPERTY".......................................................... 8 1.25 "RECLAMATION"....................................................... 8 1.26 "TECHNICAL STUDIES"................................................. 9 1.27 "TRANSFER DATE"..................................................... 9 1.28 "USMX STOCK"........................................................ 9 2. GRANT BY NPMC OF EXCLUSIVE RIGHTS TO USMX................................ 9 3. USMX'S RIGHT TO ACQUIRE PROPERTY; NPMC'S SECURITY INTERESTS.............. 10 4. PAYMENT BY USMX-TO NPMC.................................................. 11 5. NPMC ELECTION RIGHTS..................................................... 18 5.1 Mining Venture Agreement............................................ 18 5.2 Net Returns Royalty................................................. 19 5.3 Notice of Election.................................................. 20 6. DEADLINE FOR COMMENCEMENT OF COMMERCIAL PRODUCTION; ADVANCE MINIMUM ROYALTIES................................................................ 20 7. CONDUCT OF OPERATIONS; MAINTENANCE OF PROPERTIES AND AIDEA REIMBURSEMENT AGREEMENT................................................................ 22 8. ACQUISITIONS WITHIN THE AREA OF INTEREST................................. 22 i 9. ASSIGNMENT, INUREMENT AND PREFERENTIAL PURCHASE RIGHT.................... 23 10. FORCE MAJEURE............................................................ 26 11. COOPERATION OF NPMC...................................................... 27 12. PRESS RELEASES........................................................... 27 13. CONFIDENTIALITY.......................................................... 28 14. TIME OF THE ESSENCE...................................................... 29 15. APPROVALS OF BOARDS OF DIRECTORS......................................... 29 16. GOVERNING LAW............................................................ 29 17. MEMORANDUM OF AGREEMENT.................................................. 30 18. NOTICES.................................................................. 30 19. SURRENDER OF PROPERTIES AND AGREEMENT.................................... 31 20. SHAREHOLDER HIRE......................................................... 31 21. BIDDING OPPORTUNITY...................................................... 32 22. ENTIRE AGREEMENT......................................................... 32 23. SURVIVAL OF OBLIGATIONS.................................................. 32 EXHIBITS A - Property Description Part 1 - Leases Part 2 - Equipment and Fixtures Part 3 - Area of Interest B - Operating Stipulations C - Net Returns Royalty D - Demand and Piggyback Registration Rights E - Mining Venture Agreement Schedule 1 Part 1 - Properties and Title Exceptions Part 2 - Area of Interest Part 3 - Equipment and Fixture Schedule 2 - Accounting Procedure Schedule 3 - Tax Matters Schedule 4 - Net Returns Schedule 5 - Insurance Schedule 6 - Operating Stipulations ii AGREEMENT THIS AGREEMENT is made and entered into effective as of December 16, 1994, regardless of the dates upon which it actually is signed by the parties hereto, by and between NORTH PACIFIC MINING CORPORATION, an Alaska corporation ("NPMC"), and USMX, INC., a Delaware corporation ("USMX") (hereinafter collectively referred to as "the Parties"). R E C I T A L S A. On July 25, 1994, NPMC and USMX entered into a Letter Agreement with respect to certain property interests owned by NPMC in the Mt. McKinley and Nulato Recording Districts of Alaska. B. USMX has made the property payments, met the work commitments and fulfilled the other conditions provided for in that Letter Agreement. NOW, THEREFORE, in consideration of the payment by USMX to NPMC of the sum of $50,000, the receipt and adequacy of which hereby are acknowledged by NPMC, and in consideration of the mutual covenants of the parties contained herein, NPMC and USMX hereby agree as follows: 1. DEFINITIONS For purposes of this Agreement, the following terms shall have the following definitions: 1.1 "ADVANCE MINIMUM ROYALTY" means the required annual payment to be made by USMX to NPMC as provided in Section 6 of this Agreement. 1.2 "AFFILIATE" means any person, partnership, joint venture, corporation, or other form of enterprise which directly or indirectly controls, is controlled by, or is under common control with any party hereto. For purposes of the preceding sentence, "control" means possession, directly or indirectly, of the power to direct or cause direction of management and policies through ownership of voting securities, contract, voting trust, or otherwise. The term Affiliate also includes any entity in which a Party or its Affiliate holds at least a 20% interest. As of the Effective Date, Affiliates of USMX include but are not limited to USMX of Alaska, Inc. and Pegasus Gold Inc., and Affiliates of NPMC include, but are not limited to, CIRI. 1.3 "AGREEMENT" means this Agreement, including all written and executed amendments and modifications hereof, and all attached exhibits and schedules, which are incorporated herein by this reference. 1.4 "AIDEA REIMBURSEMENT AGREEMENT" means that certain agreement dated July 18, 1992, between the Alaska Industrial Development and Export Authority and NPMC. 1.5 "APPROVALS" means all federal, state, local and other governmental and private permits, licenses, approvals, easements and any other waivers, non-objections or authorizations necessary to achieve and sustain Commercial Production. 1.6 "AREA OF INTEREST" means the lands described in Part 3 of Exhibit "A" hereto. 1.7 "CIRI" means Cook Inlet Region, Inc., an Alaska Native Regional Corporation organized and existing in accordance with the 2 provisions of the Alaska Native Claims Settlement Act, 43 U.S.C. Section 1601 ET SEQ. and the Alaska Corporations Code. 1.8 "COMMERCIAL PRODUCTION" means the delivery to a bona fide purchaser of Minerals, ores, concentrates or other products derived from Minerals Mined on a continuing basis from a Lease, for a period of forty-five (45) consecutive days at not less than seventy percent (70%) of the pro forma production capacity of the mine and related facilities as set forth in the Feasibility Report. Deliveries of Minerals, ores, concentrates or other products from a Lease resulting from pilot or test operations shall not constitute Commercial Production. USMX shall notify NPMC not more than ten (10) days after having begun what USMX reasonably and in good faith believes is the forty-five (45) day Commercial Production period referred to herein, and also within ten (10) days after having achieved Commercial Production. 1.9 "DEVELOP" or "DEVELOPMENT" means all preparations for the removal and recovery of Minerals from the Property, including, if necessary, the construction of roads, the construction and installation of a mill and the construction or installation of any other improvements to be used for the Mining, handling, milling, processing, or other beneficiation of Minerals produced from the Property. 1.10 "EFFECTIVE DATE" means the effective date of this Agreement which is December 16, 1994. 1.11 "EQUIPMENT AND FIXTURES" means those certain items of equipment and fixtures (whether owned or leased) which are described in Part 2 of Exhibit "A." 3 1.12 "EXPLORATION" or "EXPLORE" means all activities directed toward ascertaining the existence, location, quantity, quality or commercial value of deposits of Minerals. 1.13 "FEASIBILITY REPORT" means a study and a written report prepared by USMX and reviewed by a qualified third party, or prepared by such third party, or a combination thereof, that evaluates whether Minerals can be Mined, processed and marketed at a profit from a Lease on a sustained basis. Any such third party shall be selected and paid solely by USMX. NPMC may, at its own cost, select a third party to review and comment upon a Feasibility Report prepared by or for USMX. A separate study and Feasibility Report shall be prepared for each Lease. Each such study and report shall be based upon all information available to USMX prior to the date of the Feasibility Report and the Feasibility Report shall contain such detail as is customary in the industry for an analysis of the technical and economic feasibility of Development and Mining of Minerals on the Property so that the Feasibility Report can be used by USMX's Board of Directors to make a Production Decision and by NPMC's Board of Directors to decide whether to acquire a participating interest in the Development and Mining of Minerals from the Lease. Without limiting the foregoing, each Feasibility Report shall provide cost estimates, projections as to material movements and ore grades on an annual basis, and economic evaluations based upon annual cash flow calculations for the life of the ore reserves determined to exist within the Lease as of the date of the Feasibility Report. Each study and report shall include but not be limited to the following: 4 (a) An analysis of a proposal for Development and Mining, including analysis of (1) the type, grade, and quantity of Mineral reserves, (2)the proposed size, type, rated capacity, and placement of Mining, milling, and production equipment and facilities, (3) the proposed Mining, milling, and production rates, (4) the results of one or more Technical Studies undertaken to project the efficiency of proposed Mining, milling, and production techniques, (5) the facilities and methods proposed for treating, handling, and disposing of Mining, milling, and other processing waste, (6) all Approvals which might be required in order to Develop the Lease and to commence and sustain Commercial Production, (7) Reclamation requirements and any additional environmental concerns raised by the proposal, and (8) such other matters as are deemed by USMX to be appropriate for analysis; (b) Reasonable estimates of capital costs that would need to be incurred to implement the proposal for Development and Mining, which estimates shall include (1) reasonable estimates of material expenditures required to purchase, construct, and install all material buildings, machinery, equipment, and other facilities required to implement the proposal; and (2) reasonable estimates of material expenditures required to perform all other related work required to implement the proposal (including reasonable estimates of the cost of acquiring all Approvals and of any working capital requirements). Said estimates shall 5 include a specific schedule setting forth the timing of the estimated capital requirements for the proposal; (c) Reasonable estimates of the annual expenditures required during the first year of Mining after completion of the capital program described in subparagraph (b) above, and for subsequent years of Mining, including estimates of annual operating, maintenance, and administrative expenditures, material equipment leasing expenditures, material supply contract expenditures, capital expenditures for expansion or modification, working capital funding requirements, royalties, taxes (other than income taxes), insurance costs, and all other anticipated material costs of Mining; (d) Economic projections of the profitability of the proposal and the rate of return that would be realized by implementing the proposal, the sensitivity of those projections to changes in particular variables, and the risk that such variables will change in particular ways; (e) The known Mineral deposits and reserves, proven or probable, located on the Lease; (f) Such additional factual information, if any, respecting the proposal for Development and Mining, as might reasonably be expected to be required in the normal course of business by a state or federally regulated financial institution (or such other lender that may be approved by NPMC pursuant to this Agreement) to enable it to determine whether to loan to a Party its proportionate share of Development costs; provided, that the foregoing 6 is not intended to require independent consultants' reports or opinions; and (g) Such other information as USMX deems appropriate. Each Feasibility Report shall represent USMX's good faith effort to analyze the technical and economic feasibility of undertaking Development and Mining on a Lease in a manner that is reasonably sufficient to allow USMX to make its own internal determination of whether to undertake Development and Mining on the Lease. 1.14 "LEASE(S)" means the Illinois Creek and/or the Round Top State of Alaska Mining Leases which are attached and more particularly described in Part 1 of Exhibit "A," and any other leases which shall become subject to this Agreement pursuant to Section 8 hereof. NPMC represents, to the best of its knowledge, but without having made any inquiry or investigation, that the Illinois Creek and the Roundtop Leases are in good standing and not subject to any defects or claims of default by the Lessor. 1.15 "LETTER AGREEMENT" means the Letter Agreement dated July 25, 1994 between NPMC and USMX. 1.16 "MINERALS" means minerals as that term is used and defined in Section 1.(1) in each of the Leases attached as Part 1 of Exhibit "A." 1.17 "MINING" or "MINE" (when used as a verb), means the mining, extracting, producing, handling, milling, or other processing of Minerals from the Property and the Reclamation of lands affected thereby. 7 1.18 "MINING VENTURE AGREEMENT" means a Mining Venture Agreement which may be entered into by the Parties in the form attached as Exhibit "E" hereto. 1.19 "NET RETURNS ROYALTY" means a royalty calculated and paid as provided in Exhibit "C" hereto. 1.20 "NOTICE" or "NOTIFY" means notice given in accordance with the provisions of Section 18 of this Agreement. 1.21 "OPERATING STIPULATIONS" means the operating requirements, standards and conditions set forth in Exhibit "B" hereto. 1.22 "OPERATIONS" means the activities carried out or to be carried out under this Agreement. 1.23 "PRODUCTION DECISION" means a decision and authorization by USMX's Board of Directors, made after completion of a Feasibility Report, to put a Lease into Commercial Production in accordance with the results of the Feasibility Report and study. A Production Decision shall be effective when Notice thereof has been delivered to NPMC. 1.24 "PROPERTY" means the Leases, plus any other properties or interests in properties acquired by NPMC or USMX within the Area of Interest while this Agreement is in effect, as provided in Section 8 hereof. 1.25 "RECLAMATION" means restoration of an area of Operations pursuant to and in accordance with the applicable provisions of each Lease, and with the requirements of all applicable federal, state or local laws or regulations, including any laws or regulations hereafter enacted. 8 1.26 "TECHNICAL STUDIES" means such geological, archeological, biological, chemical, climatic, hydrological, mechanical, metallurgical, meteorological, Mining, operational (including but not limited to such operational areas of concern as access, employee housing, equipment, fuel, power, transportation, water, waste disposal, and Reclamation), or other scientific or engineering studies relating to or affecting the Development of a mine, the Mining, processing, or marketing of Mineral resources therefrom, or the Reclamation thereof, the completion of which studies is reasonably necessary before a Feasibility Report can be completed. 1.27 "TRANSFER DATE" means the date on which USMX pays to NPMC cash and/or stock with a value of Four Million Dollars ($4,000,000) as provided in Section 4 hereof. 1.28 "USMX STOCK" means the $.001 par value voting common stock of USMX, the shares of which, upon issuance, are fully paid-up and non-assessable. 2. GRANT BY NPMC OF EXCLUSIVE RIGHTS TO USMX NPMC hereby grants to USMX the sole and exclusive rights, subject to the terms and conditions of this Agreement (including but not limited to the conditions that USMX prepare a Feasibility Report and make a Production Decision before acquiring the Property), to Explore and Develop the Property and to Mine, remove, process and sell Minerals produced from the Property. 9 3. USMX'S RIGHT TO ACQUIRE PROPERTY; NPMC'S SECURITY INTERESTS Promptly after a Production Decision, and subject to the provisions of Section 4 below, USMX shall Notify NPMC in writing of same (such Notice is hereinafter referred to as the "Production Decision Notice"). On the Transfer Date, NPMC shall transfer to USMX, by deeds, assignments or other instruments of transfer reasonably requested by USMX and its counsel, all of NPMC's right, title and interest in and to the Property including the Equipment and Fixtures. NPMC's transfer to USMX shall be free and clear of liens and encumbrances created by, through or under NPMC or CIRI (other than NPMC's security interest referred to herein), but without any other warranties. Concurrently with such transfer, USMX shall grant to NPMC a perfected first priority security interest in the Property including the Equipment and Fixtures, in a form reasonably requested by NPMC and its counsel, securing USMX's obligations under this Agreement. NPMC's security interests shall terminate upon USMX's having achieved Commercial Production, and NPMC shall execute such instruments as are reasonably requested by USMX and its counsel to release NPMC's security interests. NPMC shall only subordinate its security interests to a state or federally regulated financial institution (or to such other lender as is approved in advance by NPMC, which approval shall not be unreasonably withheld) that agrees to provide project financing to enable USMX to achieve Commercial Production, and only to the extent that the proceeds of such financing are actually expended on or for the benefit of the Property. Such subordination shall be at the request of the lending institution and shall be on terms reasonably acceptable to NPMC and its counsel. NPMC and USMX 10 expressly acknowledge that NPMC shall not be required to subordinate its security interest to any other lien, including without limitation any lien to secure financing for Exploration Operations on the Property. 4. PAYMENT BY USMX-TO NPMC 4.1 In the event USMX makes a Production Decision, USMX shall deliver to NPMC consideration consisting of cash and/or shares of USMX Stock with a value of Four Million Dollars ($4,000,000) (the "Production Decision Payment") as follows: (a) USMX may elect to pay the Production Decision Payment entirely in cash, in which case USMX shall wire transfer Four Million Dollars ($4,000,000) to an account designated by NPMC within thirty (30) days of the date of the Production Decision Notice; or (b) subject to the provisions of section 4.2, USMX may elect to pay all or a portion of the Production Decision Payment in shares of USMX Stock, in which case USMX shall provide written Notice to NPMC within thirty (30) days of the date of the Production Decision Notice stating (i) that USMX desires to pay all or a portion of the Production Decision Payment in shares of USMX Stock, (ii) specifying the amount of the Production Decision Payment to be paid in cash and the amount of the Production Decision Payment to be paid in shares of USMX Stock, and (iii) showing the computation of the number of shares of USMX Stock to be issued in payment of such portion of the Production Decision Payment to be paid in shares of USMX Stock (such shares of USMX Stock are hereinafter referred to as the "Shares"), which number 11 shall be equal to (A) the amount of the Production Decision Payment to be paid in shares of USMX Stock divided by (B) the average closing price of USMX Stock on the Nasdaq National Market, the New York Stock Exchange or the American Stock Exchange, as the case may be, for the thirty (30) trading days immediately preceding the earlier to occur of (i) any public announcement of the Production Decision, or (ii) the date of the Production Decision Notice (the "Average Price"). 4.2 The provisions of Section 4.1 notwithstanding, (a) USMX may pay all or a portion of the Production Decision Payment in Shares if and only if the USMX Stock is traded on the Nasdaq National Market, the New York Stock Exchange or the American Stock Exchange at the time USMX delivers the Notice of its intent to pay all or a portion of the Production Decision Payment in Shares and the USMX Stock can reasonably be anticipated to continue to be so traded at least through the date on which the Resale Prospectus can reasonably be anticipated to be available for use by NPMC; and (b) in the event USMX elects to deliver Shares in payment of all or a portion of the Production Decision Payment, (A) if the Shares, when issued, would represent more than ten percent (10%) of the issued and outstanding shares of USMX Stock (after giving effect to the issuance of the Shares), NPMC may require USMX (by written Notice to USMX) to pay such portion of the Production Decision Payment in cash as shall be necessary to reduce the number of Shares to such number as shall represent 9.9% of the issued and outstanding shares of USMX Stock (after giving effect to such issuance), and (ii) if the Shares, when issued, would represent 12 less than two and one-half percent (2.5%) of the issued and outstanding shares of USMX Stock (after giving effect to the issuance of the Shares), NPMC shall have the right, by written Notice to USMX, to require USMX to pay the Production Decision Payment entirely in cash as provided in clause (a) of Section 4.1 above, which payment shall be made within five (5) days of receipt of NPMC's Notice to USMX. 4.3 In the event USMX elects to deliver Shares in payment of all or a portion of the Production Decision Payment, the following provisions shall apply: (a) USMX shall give all notices, file all listing applications and make any and all other filings or applications, including all notices to and filings with the Nasdaq Stock Market, the New York Stock Exchange or the American Stock Exchange, as the case may be, as may be required to lawfully issue the Shares and to comply with the rules and regulations of any such organization with respect to the issuance of the Shares. In addition, USMX shall use its best efforts to ensure that the USMX Stock remains eligible for trading on the Nasdaq National Market, the New York Stock Exchange or the American Stock Exchange at all times during which NPMC holds Shares and has registration rights under this Agreement, including under Exhibit D hereto. (b) Promptly following the date of the Production Decision Notice, but in no event more than sixty (60) days thereafter, USMX shall file with the Securities and Exchange Commission (the "SEC") on an appropriate form a registration statement covering resales by NPMC of the Shares (the "Registration Statement"). USMX shall use its best efforts to cause the 13 Registration Statement to be declared effective as soon as practicable thereafter, but in any event within one hundred and fifty (150) days after the date of the Production Decision Notice. NPMC shall, upon request by USMX, provide all information relating to NPMC required to be included in the Registration Statement. (c) If (i) USMX is unable to cause the Registration Statement to be declared effective within one hundred and fifty (150) days after the date of the Production Decision Notice, (ii) it becomes reasonable to believe during such one hundred and fifty (150) day period that USMX will be unable to cause the Registration Statement to be declared effective within such period, or (iii) the USMX Stock ceases to be traded on the Nasdaq National Market, the New York Stock Exchange or the American Stock Exchange prior to the time that the Registration Statement is declared effective, then, in any such event, NPMC and USMX each shall have the right, by written Notice to the other, to require USMX to pay the Production Decision Payment entirely in cash as provided in clause (a) of section 4.1 above, which payment shall be made within fifteen (15) business days of receipt of NPMC's Notice to USMX. (d) No later than two days after the date on which the Registration Statement is declared effective by the SEC, USMX shall deliver to NPMC a copy of the prospectus which comprised a part of the Registration Statement (the "Resale Prospectus") together with an opinion of counsel reasonably acceptable to NPMC (which opinion shall be addressed to NPMC and shall expressly authorize NPMC to rely thereon) to the effect that (i) the Registration Statement has been declared effective, (ii) no stop order is in effect, and (iii) the Shares may be resold in the manner described in the Resale 14 Prospectus without restriction of any kind other than compliance with a prospectus delivery requirement and compliance with applicable state securities laws, if any. (Upon request, USMX shall also register or qualify the Shares at USMX's expense under such state securities or blue sky laws as NPMC shall reasonably request; provided, however, that such obligation shall be limited in the same manner as such obligation is limited in Exhibit D to this Agreement.) (e) Concurrently with the delivery of the Resale Prospectus, USMX shall (i) issue the Shares and shall deliver the certificates evidencing the Shares to NPMC, and (ii) shall pay by wire transfer to an account designated by NPMC that portion of the Production Decision Payment, if any, which is to be paid in cash. The certificates evidencing the Shares shall initially bear the following legend: The shares evidenced by this certificate are restricted securities and may not be sold or transferred except in compliance with the registration requirements of the Securities Act of 1933 or with an applicable exemption from such registration requirement. USMX shall instruct the transfer agent for its Common Stock to facilitate without delay the issuance of certificates not bearing any restrictive legends in connection with any resales by NPMC covered by the Registration Statement. (f) USMX shall use its best efforts to keep the Registration Statement effective and the Resale Prospectus available for use by NPMC for a period of thirty-six (36) months commencing with the date the Resale Prospectus is delivered to NPMC (the "Shelf Registration Period"). In the event at any time during 15 the Shelf Registration Period, USMX believes that the Resale Prospectus may not lawfully be used for resales by NPMC for any reason, USMX shall immediately notify NPMC and USMX shall promptly take such action as may be necessary to enable NPMC to again use the Resale Prospectus, including the filing of a post-effective amendment to the Registration Statement. In the event NPMC is unable to use the Resale Prospectus for any period or periods during the initial Shelf Registration Period, then the Shelf Registration Period shall be extended by the number of days in such period or periods. (g) USMX shall be responsible for all fees incurred by it in connection with the filing of the Registration Statement and with maintaining the effectiveness of the Registration Statement during the Shelf Registration Period, including, without limitation, all Commission filing fees, telephone and delivery expenses, fees and disbursements of counsel for USMX, fees and disbursements of the auditors and accountants for USMX and costs of delivering a reasonable number of copies of the Resale Prospectus and all amendments thereto included in the Registration Statement or any post-effective amendment thereto. NPMC shall be responsible for the fees and disbursements of its own advisors, and all expenses of sale, including any commissions and expenses of underwriters or selling agents solely attributable to the Shares being offered and sold by NPMC. (h) Following the expiration of the Shelf Registration Period, if, in NPMC's reasonable judgment, NPMC is unable to resell the Shares which it may continue to hold without restriction (whether in reliance on Rule 144 (k) or any similar rule), then 16 NPMC shall have the registration rights (two demand registrations and unlimited piggyback registrations) set forth in Exhibit D to this Agreement for an additional period of four years following the expiration of the Shelf Registration Period. (i) As provided in Section 3 of this Agreement, NPMC shall have no obligation to transfer title to the Property, Fixtures or Equipment until the Transfer Date. If USMX fails to comply with any of its obligations or to perform any of its covenants under this Section 4, such failure shall constitute a breach of this Agreement. NPMC shall have no obligation to transfer title to the Property, Fixtures, or Equipment to USMX in the event of any breach by USMX prior to the Transfer Date. The time period for achieving commercial Production shall not be extended as the result of any delay in the occurrence of the Transfer Date. (j) The indemnification provisions set forth in Exhibit D to this Agreement shall apply with respect to the registration contemplated by this Section 4. (k) During the period from the beginning of the thirty (30) day trading period over which the Average Price is computed through the date on which the Shares are issued, USMX shall not declare or set a record date for the payment of any dividend or distribution with respect to the USMX Stock or effect or set a record date with respect to a stock split or similar transaction with respect to its capital stock which would affect the value of the USMX Stock. (l) Acknowledging that NPMC may be acquiring shares of USMX Stock pursuant to the terms of this Agreement, NPMC makes the 17 following representations to USMX in connection with such potential acquisition of the Shares: (i) NPMC is experienced in and knowledgeable with regard to the business which USMX conducts and intends to conduct and, by reason of NPMC's business and financial experience, NPMC is capable of evaluating the risks and merits of acquiring and holding Shares as contemplated by this Agreement, (ii) NPMC has reviewed the filings made by USMX under the Securities Exchange Act of 1934 and has had the opportunity to ask questions and receive answers from USMX regarding the business and financial affairs of USMX, and (iii) NPMC is able to bear the economic risk of an investment in the Shares. In addition, NPMC agrees to provide USMX with such additional representations as USMX may reasonably request in connection with the issuance of the Shares by USMX or the resale of the Shares by NPMC. 5. NPMC ELECTION RIGHTS Within ten (10) days after completion of each Feasibility Report, USMX shall provide NPMC with a complete copy of same. Within ten (10) days after USMX has obtained all Approvals and has made a Production Decision as to the Lease covered by the Feasibility Report, whichever occurs later, USMX shall so Notify NPMC in writing. Within sixty (60) days after receipt of that Notice, NPMC shall elect in writing to do one of the following: 5.1 MINING VENTURE AGREEMENT: To enter with USMX into a Mining Venture Agreement attached as Exhibit "E" effective as of that election, in which event USMX shall transfer to NPMC an undivided twenty-five percent (25%) interest in the Lease which is the subject of the Production Decision, and USMX's and NPMC's respective interests in that Lease shall thereafter be subject to 18 that Mining Venture Agreement (in lieu of forming a mining venture, the parties may, by mutual agreement, elect to create a Limited Liability Company to be organized, managed and operated in substantially the same way as described in the Mining Venture Agreement attached as Exhibit "E.") Such transfer shall be without warranties of title by USMX, except as to parties claiming by, through or under USMX; PROVIDED, HOWEVER, if USMX has obtained project financing, NPMC's twenty-five percent (25%) interest shall be subject to any security interests granted by USMX for such project financing. NPMC shall however only be responsible for its proportionate share of expenses incurred from and after the date of its election to acquire an undivided twenty-five percent (25%) interest, and NPMC shall have no liability for any costs or expenses incurred by USMX prior to that date, including but not limited to loans incurred by USMX for which USMX has granted a security interest and NPMC has agreed to subordinate its perfected priority security interest in the Lease pursuant to Section 3 of this Agreement. Upon the effective date of the Mining Venture Agreement, except as to Sections 6 and 9.1 hereof, this Agreement shall no longer be of any force or effect as to the Lease covered by the Mining Venture Agreement, and the relationship between NPMC and USMX concerning such Lease thereafter shall be governed exclusively by the Mining Venture Agreement. OR 5.2 NET RETURNS ROYALTY: To receive a five percent (5%) Net Returns Royalty, in which event USMX shall execute, acknowledge and deliver to NPMC, and NPMC shall execute, acknowledge and accept, a conveyance of royalty in the form attached as Exhibit "C." 19 5.3 NOTICE OF ELECTION: If NPMC fails to Notify USMX in writing within the above-described sixty (60) day period as to whether NPMC elects the alternative in Section 5.1 or the alternative in section 5.2, NPMC shall be deemed to have elected the alternative set forth in Section 5.2; provided, however, that NPMC's sixty (60) day election period shall be extended during any period in which transfer of the USMX stock or payment of the purchase price is delayed as provided in Section 4; and in no event shall NPMC be required to make such election prior to the Transfer Date. A separate election shall be made as provided herein for each Lease and for each additional property within the Area of Interest that becomes subject to this Agreement pursuant to Section 8, provided that such property includes at least 2,000 contiguous acres. If the additional property contains fewer than that number of acres and is not included within a separate lease, then for purposes of this Agreement, it shall be treated as though it were part of the Lease to which most of such acreage is closest. 6. DEADLINE FOR COMMENCEMENT OF COMMERCIAL PRODUCTION; ADVANCE MINIMUM ROYALTIES 6.1 USMX shall have three (3) years from the Effective Date in which to achieve Commercial Production from at least one of the Leases. If Commercial Production from at least one of the Leases has not been achieved by that date, then in order to keep this Agreement in effect and retain its interest in the Property, USMX shall pay to NPMC an Advance Minimum Royalty of Three Hundred Thousand Dollars ($300,000) on that date and on each subsequent anniversary of the Effective Date of this Agreement thereafter 20 during which the achievement of Commercial Production is delayed and USMX continues to hold the Property and maintain its rights under this Agreement; PROVIDED, HOWEVER, that if Commercial Production from at least one of the Leases has not been achieved within five (5) years from the Effective Date, then this Agreement shall terminate and shall be of no further force or effect, and USMX shall assign immediately the Property to NPMC free and clear of all liens and encumbrances arising by, through or under USMX. 6.2 Each Advance Minimum Royalty payment shall be increased by an amount equal to the $300,000 annual payment provided for above multiplied by a fraction, the numerator of which is the Price Index on the Effective Date of this Agreement and the denominator of which is the Price Index for the month immediately preceding the annual Minimum Advance Royalty payment. Price Index means the simple average of the following indices published by the United States Department of Labor, Bureau of Labor Statistics: (1) Price Index Urban Wage Earners, All Cities 1982-84 = 100 and (ii) Wholesale Price Index Nonferrous Metals 1967 = 100. If either of the foregoing indices should cease to be available, the best available substitute shall be used. 6.3 Advance Minimum Royalties paid pursuant to this Section 6 shall be carried forward as credits until fully recouped from Participating Interest or Net Returns payments otherwise due NPMC according to the Mining Venture Agreement attached as Exhibit "E" hereto (if NPMC elects the alternative in Section 5.1) or the Net Returns Royalty as described in Exhibit "C" hereto (if NPMC elects the alternative in Section 5.2); provided that, if all of the Advance Minimum Royalties have not been recouped fully by the time 21 that USMX permanently ceases production from the Property, NPMC shall be entitled to retain all unrecouped Advance Minimum Royalties. 7. CONDUCT OF OPERATIONS MAINTENANCE OF PROPERTIES AND AIDEA REIMBURSEMENT AGREEMENT USMX shall conduct all Operations on the Property in accordance with the Operating Stipulations. Subject to its surrender rights under Section 19 below, USMX shall, for so long as this Agreement is in effect, maintain in good standing all agreements and Leases constituting any part of the Property including payment of all required rentals and filing fees, performance of any required assessment work and payment of all taxes due with respect to the Property other than taxes which may become due and payable by NPMC as a result of royalties or other payments received by NPMC pursuant to this Agreement. If at any time while this Agreement remains in effect NPMC shall become obligated to pay any monies to AIDEA pursuant to the AIDEA Reimbursement Agreement, USMX shall satisfy said obligation unless as of such time the Mining Venture Agreement is in effect, in which event such payment shall be treated as a joint venture expense thereunder. 8. ACQUISITIONS WITHIN THE AREA OF INTEREST If either NPMC or USMX acquires any interest in any property or a right to acquire any property within the Area of Interest while this Agreement remains in effect, such interest automatically shall become subject to this Agreement, and the party acquiring 22 such interest shall execute such instruments of conveyance or transfer as may be appropriate to make that interest a part of the Property subject to this Agreement. 9. ASSIGNMENT, INUREMENT AND PREFERENTIAL PURCHASE RIGHT 9.1 Until Commercial Production has been achieved from at least one of the Leases, USMX may not assign or transfer any of its interests under this Agreement or the Property to any third party without the prior written consent of NPMC. 9.2 After Commercial Production has been achieved from at least one of the Leases, USMX shall be entitled to assign its interests under this Agreement or the Property without the prior consent of NPMC, subject to the following conditions: (a) No transfer of all or any part of USMX's interest in this Agreement or the Property shall be valid unless and until USMX has provided to NPMC Notice of the proposed transfer, and the transferee, as of the effective date of the transfer, has committed in writing to be bound by this Agreement to the same extent as USMX; (b) No transfer permitted by this Section 9 shall relieve USMX of its responsibility for the performance of all obligations, whether accruing before or after such transfer, which arise out of Operations conducted according to this Agreement, unless NPMC specifically releases USMX from such obligations; (c) Other than the granting of a security interest to a financial institution or lender as described in Section 3, or a transfer pursuant to foreclosure thereof, a transfer may only be made to a transferee (i) that has been engaged primarily in the 23 business of Exploring for, Mining or producing Minerals for at least two years preceding the date of the proposed transfer, or that has received an exemption for the transfer under applicable securities laws, (ii) that is at least as financially qualified as USMX, and (iii) if the proposed transferee will also become the Manager of a Mining Joint Venture formed pursuant to Exhibit "E," then such transferee shall have demonstrated experience in Development and Mining operations comparable to the operations then being conducted or proposed to be conducted pursuant to this Agreement; and (d) Upon any transfer resulting from foreclosure or other enforcement of rights in a security interest, the acquiring third party shall be deemed to have assumed the position of USMX with respect to this Agreement and NPMC, and it shall comply with and be bound by the terms and conditions of this Agreement. 9.3 Except as otherwise provided in Section 9.4, if USMX desires to transfer all or any part of its interest in this Agreement or the Property, then in addition to other rights and restrictions on transfer set forth herein, NPMC shall have a preferential right to purchase such interests as hereafter provided: (a) USMX shall promptly Notify NPMC of its intent to transfer all or any part of its interest in this Agreement or the Property. The Notice shall state the price and all other pertinent terms and conditions of the intended transfer, and shall be accompanied by a copy of the offer or contract for sale. NPMC shall have thirty (30) days from the date such Notice is delivered to Notify USMX whether it elects to acquire the offered interest at 24 the same price and on the same terms and conditions as are set forth in the Notice. If it does so elect, the transfer shall be consummated promptly after Notice of such election is delivered to USMX; (b) If NPMC fails to so elect within the period provided for in the preceding subsection 9.3(a), USMX shall have ninety (90) days following the expiration of such period to consummate the transfer to the third party at a price and on terms no more favorable to the third party than those offered by USMX to NPMC in the Notice required by this Section 9.3; (c) If USMX fails to consummate the transfer to the third party within the period set forth in subsection 9.3(b), the preferential purchase right of NPMC in such offered interest shall be deemed to be revived, and any subsequent proposal to transfer such interest shall be conducted in accordance with all of the procedures set forth in this Section 9.3; and (d) Only United States currency shall be used as consideration for transfers. 9.4 Section 9.3 shall not apply to the following: (a) A transfer by USMX of all or any part of its interest in this Agreement or the Property to an Affiliate; (b) A transfer by USMX, pursuant to a corporate merger, consolidation, amalgamation or reorganization of USMX by which the surviving entity shall possess substantially all of the stock, or all of the property rights and interests, and be subject to substantially all of the liabilities and obligations of USMX; or (c) The grant by USMX of a security interest in any interest in this Agreement or the Property by mortgage, deed of 25 trust, pledge, lien or other encumbrance in order to secure financing from a state or federally regulated lending institution or such other lender as is approved in advance by NPMC, which approval shall not be withheld unreasonably by NPMC, for the purpose of providing financing to enable USMX to achieve Commercial Production. 9.5 Subject to the foregoing provisions of this Section 9, both the rights and obligations under this Agreement shall inure to the benefit of NPMC's and USMX's respective successors and assigns. 10. FORCE MAJEURE Except for the obligation to make payments of money when due hereunder, the obligations of USMX and the term of this Agreement shall be suspended and extended to the extent and for the period that performance is prevented by any cause beyond USMX's reasonable control, PROVIDED, HOWEVER, that all periods of such suspension and/or extension shall not exceed a cumulative total period of twelve (12) months. Such causes shall include but not be limited to actual labor disputes (however arising and whether or not employee demands are reasonable or unreasonable or within the power of USMX to grant); acts of God; laws, regulations, orders, proclamations, instructions or requests of any government or governmental entity; judgments or orders of any court; inability to obtain on reasonably acceptable terms any Approvals or any private license, permit or other authorization; curtailment or suspension of activities to remedy or avoid an actual or alleged, present or prospective violation of federal, state or local environmental standards; acts of war or conditions arising out of or attributable 26 to war, whether declared or undeclared; riot, civil strife, insurrection or rebellion; fire, explosion, earthquake, storm, flood, sink holes, drought or unusually adverse weather conditions. USMX shall give prompt Notice to NPMC of any suspension of performance caused by force majeure, stating in that Notice the nature of the suspension, the reasons for the suspension, and the expected duration of the suspension. USMX shall make diligent efforts to remove such preventing or delaying cause and to fulfill all other obligations, including any obligations which are hindered but not prevented thereby, and shall resume performance as soon as reasonably practicable. It is specifically agreed that a suspension caused by force majeure shall extend the five (5) year period described in Section 6.1 for the duration of the force majeure, subject to the cumulative twelve (12) month total limitation described above in this Section 10. 11. COOPERATION OF NPMC NPMC agrees to comply with all reasonable requests by USMX for assistance and cooperation in obtaining all Approvals; PROVIDED, HOWEVER, that USMX shall remain solely responsible for obtaining all Approvals and provided further that if NPMC incurs out-of-pocket expenses in providing such assistance, USMX shall reimburse NPMC for the reasonable costs of same. 12. PRESS RELEASES No press release shall be issued by either Party concerning this Agreement, or the results of any Operations or proposed Operations hereunder unless and until approved in advance in 27 writing by the other Party. Such approval shall not be withheld unreasonably; however, if applicable securities laws clearly require public disclosure of the terms of this transaction, or the results of any Operations or proposed Operations hereunder, USMX may issue a press release within two (2) business days after providing a copy of the proposed release to NPMC and agreeing to make reasonable changes in the wording of the release if requested to do so by NPMC. 13. CONFIDENTIALITY The financial terms of this Agreement and all information relating to the Property that is derived pursuant to this Agreement, shall be the exclusive property of the Parties and shall be treated by the Parties as strictly confidential and shall not be disclosed to any third parties without the prior written consent of both parties hereto, which consent shall not be withheld unreasonably. Following Notice to the other party and provided that the third party agrees in writing to treat the same as confidential to the same extent as the Parties are hereby obligated, it is specifically agreed that such information may be provided without the consent of the other party, to: (a) lending institutions or lenders, as described in Section 3, for purposes of obtaining financing; (b) to an Affiliate, consultant, contractor or subcontractor that has a bona fide need to be informed; (c) to any third party to whom the disclosing Party contemplates a transfer of all or any part of its interest in or to this Agreement or the Property; or 28 (d) to a governmental agency (including without limitation the SEC) or to the public which the disclosing Party believes in good faith is clearly required by pertinent law or regulation or the rules of any stock exchange; provided however, that if there is a readily ascertainable statutory or regulatory procedure available to maintain some or all of the disclosed information confidential, then prior to or simultaneously with making such disclosure the disclosing Party shall seek protection for the information being disclosed to the maximum extent such protection is available. This Section 13 shall survive the termination of this Agreement and shall remain in effect for two (2) years following the date of termination. 14. TIME OF THE ESSENCE The parties acknowledge that NPMC desires to see the Property brought into Commercial Production at the earliest possible date, consistent with the provisions of this Agreement. Accordingly, NPMC and USMX agree that time shall be of the essence of this Agreement. 15. APPROVALS OF BOARDS OF DIRECTORS NPMC and USMX each hereby represent to the other party that this Agreement has been approved by their respective Boards of Directors. 16. GOVERNING LAW 29 This Agreement shall be governed by and construed in accordance with the laws of the State of Alaska. 17. MEMORANDUM OF AGREEMENT Concurrently with the execution of this Agreement, NPMC and USMX shall execute and deliver for recording and filing in the appropriate recording districts a memorandum of this Agreement so as to provide constructive notice of the parties' respective rights hereunder. This Agreement shall not be recorded. 18. NOTICES All notices, payments and other required communications ("Notices") to the parties shall be in writing and shall be addressed respectively as follows: NPMC: North Pacific Mining Corporation 2525 C Street Anchorage, AK 99503-2689 [or P.O. Box 93330 Anchorage, AK 99509-3330] Fax: (907) 279-8836 USMX: USMX, Inc. 141 Union Blvd., Suite 100 Lakewood, CO 80228 Fax: (303) 980-1363 All Notices shall be given: (i) by personal delivery to the other party, or (ii) by fax, with a confirmation sent by registered or certified mail, return receipt requested, or (iii) by registered or certified mail, return receipt requested. All Notices shall be effective and shall be deemed delivered (i) if by personal delivery on the date of delivery if delivered during normal business hours, and if not delivered during normal business hours, on the next business day following delivery, (ii) if by electronic 30 communication on the next business day following receipt of the electronic communication, and (iii) if solely by mail on the next business day after actual receipt. Either party may change its address by Notice to the other party. 19. SURRENDER OF PROPERTIES AND AGREEMENT USMX at any time may elect to surrender all of its rights in this Agreement and the Property and relinquish same, provided that it first offers to reassign the Property to NPMC before allowing it to be abandoned. USMX shall provide Notice to NPMC of its intent to release or abandon such rights on or before March 1 of the calendar year in which such release or abandonment is proposed to occur. NPMC shall have sixty (60) days from such Notice to accept the Property, at no cost to NPMC. USMX may not release or abandon only a portion of the Property until USMX has made a Production Decision as to at least one of the Leases and has given Notice of such decision to NPMC and may not release or abandon any of the Property unless and until USMX has completed all Reclamation on such Property or has otherwise made adequate provision for completion of its Reclamation obligations. Upon any termination of this Agreement, USMX shall have six (6) months in which to remove all equipment and facilities placed upon the Property by it. 20. SHAREHOLDER HIRE USMX shall give sixty (60) days advance Notice to NPMC or any other entity designated by NPMC, of all anticipated job openings; and in hiring employees for work on the Property, USMX shall give first preference to equally qualified and available CIRI 31 Shareholders and members of their immediate families and shall then give a preference to equally qualified and available local residents. 21. BIDDING OPPORTUNITY USMX shall invite, and consider in good faith, proposals or bids from NPMC, CIRI and their Affiliates for work in connection with Operations. NPMC shall be given as much advance notice as is reasonably practicable (but in no event less than fifteen (15) days unless an emergency situation is present) prior to notice being given to other potential bidders for all proposed contract and subcontract work to be performed pursuant to this Agreement. This advance notice requirement shall not apply to proposed contracts in process (meaning those contracts for which bids were solicited prior to the Effective Date) or contracts completed as of the date of execution of this Agreement. 22. ENTIRE AGREEMENT This Agreement contains the entire understanding of NPMC and USMX regarding the subject matter hereof and supersedes all prior agreements and understandings relating thereto, including but not limited to the Letter Agreement. In the event of any conflict between the terms of this Agreement and any Exhibit or Schedule attached hereto, the terms of this Agreement shall be controlling. 23. SURVIVAL OF OBLIGATIONS The obligations created by Sections 12 and 13 of this Agreement and all applicable sections of Exhibit "B" shall survive 32 the termination of this Agreement, except upon termination due to NPMC's election to enter into the Mining Venture Agreement pursuant to Section 5.1 above, and shall continue to be binding upon the parties. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. NORTH PACIFIC MINING CORPORATION By: /s/ Jerry Booth ----------------------------- Title: VP Energy and Minerals -------------------------- USMX, INC. By: /s/ James Knox ---------------------------- Title: President ------------------------- 33 EXHIBIT D to AGREEMENT Between NORTH PACIFIC MINING CORPORATION, an Alaska corporation and USMX, INC., a Delaware corporation Dated Effective December 16, 1994 DEMAND AND PIGGY BACK REGISTRATION RIGHTS Pursuant to Section 4 of the Agreement, USMX has agreed that, following the expiration of the Shelf Registration Period (and any extensions thereof pursuant to Section 4.2(f)), if, in NPMC's reasonable judgment, NPMC is unable to resell the Shares which it may continue to hold without restriction (whether in reliance on Rule 144(k) or any similar rule), then NPMC shall have the right, on not more than two occasions during the four year period following the Expiration of the Shelf Registration Period, upon written request to USMX, to require USMX to file a registration statement with the U.S. Securities and Exchange Commission ("the Commission") under the Securities Act of 1933, as amended (the "Securities Act") to facilitate the sale and distribution of all of the USMX Stock then held by NPMC. USMX shall not be required to file a registration statement more than twice for NPMC, except upon the conditions set forth herein. In addition to the conditions set forth below, USMX may refuse NPMC's request for a registration of the USMX Stock NPMC wishes to then sell upon NPMC's receipt of an opinion that is addressed to NPMC and that expressly authorizes NPMC to rely thereon, furnished at USMX's sole expense, from counsel reasonably acceptable and in form and content reasonably D-1 acceptable to NPMC, that NPMC may publicly sell such USMX Stock without restriction under the applicable federal and state securities laws, rules and regulations. Upon receipt by USMX of a written request for registration, USMX shall, as soon as is practicable, but in no event more than sixty (60) days after receipt of such written request, file with the Commission, and use its best efforts to cause to become effective, a registration statement under the Securities Act (a "Registration Statement") which shall cover the USMX Stock specified in the initial written request. If so requested by NPMC, the public offering or distribution of USMX Stock under this Agreement shall be pursuant to a firm commitment underwriting, the managing underwriter of which shall be an investment banking firm selected and engaged by NPMC and approved by USMX, which approval shall not be unreasonably withheld. USMX shall enter into the same underwriting agreement as shall NPMC, containing representations, warranties and agreements not substantially different from those customarily made by an issuer in underwriting agreements with respect to secondary distributions. NPMC may, before such a Registration Statement becomes effective, withdraw its USMX Stock from sale, should the terms of sale not be reasonably satisfactory to it, however, such registration shall be deemed to have occurred for purposes of this Agreement, unless NPMC pays within sixty (60) days after any such withdrawal, all of the out-of-pocket expenses of USMX incurred in connection with such registration. D-2 In addition to the foregoing rights, if, at any time after the Shelf Registration Period USMX proposes to register any of its equity securities under the Securities Act, whether or not for its own account, on a form and in a manner which would permit registration of the USMX Stock for sale to the public under the Securities Act (other than a registration statement (a) on Form S-4 or Form S-8, or the successor Form to such Forms, (b) filed in connection with an exchange offer, or (c) relating to a transaction pursuant to Rule 145 of the Securities Act), USMX will at such time notify NPMC in writing of its intention to do so, describing such securities and specifying the form and manner and the other relevant facts involved in such proposed registration. Upon the written request of NPMC delivered to USMX within ten (10) days after the giving of any such notice (which request shall specify the number of shares of USMX Stock intended to be disposed of by NPMC and the intended manner of disposition thereof), USMX shall include in such registration statement the USMX Stock which NPMC has requested USMX to register, provided that: (i) If, at any time after giving notice of USMX's intention to register any of its securities and prior to the effective date of the registration statement filed in connection with such registration, USMX shall determine for any reason not to register such securities, USMX may, at its election, give notice of such determination to NPMC and thereupon will be relieved of its obligation to register the USMX Stock in connection with such registration; and (ii) If the registration so proposed by USMX involves an underwritten offering of the securities being registered, D-3 whether or not for sale for the account of USMX, to be distributed (on a firm commitment or a best efforts basis) by or through one or more underwriters, and the managing underwriter of such underwritten offering shall advise USMX in writing that, in its good faith judgment, the shares of USMX's Stock then held by NPMC, plus all the shares to be offered otherwise pursuant to the offering, are greater than can be accommodated without interfering with the successful marketing of all the securities to be offered for the account of USMX, then the managing underwriter or underwriters shall reduce or eliminate the securities proposed to be sold by NPMC and any other partiesother than USMX to a number deemed satisfactory by the managing underwriter or underwriters. Such "piggy back" offerings shall not count towards NPMC's right to require USMX to file a Registration Statement in two (2) offerings. In connection with any registration statement filed by USMX to register the USMX Stock held by NPMC, USMX shall be responsible for all fees incurred by it in connection with such registration, including all Commission filing fees, telephone and delivery expenses, fees and disbursements of counsel for USMX, fees and disbursements of the auditors and accountants for USMX and costs of delivering a reasonable number of copies of the prospectus and all amendments thereto included in the Registration Statement to facilitate the sale of the USMX Stock by NPMC. NPMC shall be responsible for the fees and disbursements of its own advisors, and all expenses of sale, including any commissions and expenses of D-4 underwriters or selling agents solely attributable to the USMX Stock being offered and sold by NPMC. If and whenever USMX is obligated by the provisions of this Agreement to effect the registration of any USMX Stock under the Securities Act, USMX shall promptly: (i) Prepare and file with the Commission any amendments and supplements to the Registration Statement and to the prospectus used in connection therewith as may be necessary to keep the Registration Statement effective and to comply with the provisions of the Securities Act and the rules and regulations promulgated thereunder with respect to the disposition of all USMX Stock covered by the Registration Statement for the period required to effect the distribution of such USMX Stock, but in no event shall USMX be required to do so for a period exceeding the greater of (A) the period required to effect the distribution of securities for the account of USMX; and (B) One Hundred Eighty (180) days from the effective date of the Registration Statement. (ii) Notify NPMC and its underwriter, and confirm such advice in writing, (A) when a Registration Statement becomes effective, (B) when any post-effective amendment to a Registration Statement becomes effective and (C) of any request by the Commission for additional information or for any amendment of or supplement to a Registration Statement or any prospectus relating thereto; (iii) Furnish at USMX's expense to NPMC such number of copies of a preliminary, final, supplemental or amended prospectus, in conformity with the requirements of the Securities Act and the rules and regulations promulgated thereunder, as may reasonably be required in order to facilitate the disposition of the USMX Stock D-5 covered by a Registration Statement, but only while USMX is required under the provisions hereof to cause a Registration Statement to remain effective; and (iv) Register or qualify at USMX's expense the USMX Stock covered by a Registration Statement under such other securities or blue sky laws of such jurisdictions in the United States as NPMC shall reasonably request, and do any and all other acts and things which may be necessary to enable NPMC to consummate the disposition in such jurisdictions of such USMX Stock; provided, however, that USMX shall in no event be required to qualify to do business as a foreign corporation or as a dealer in any jurisdiction where it is not so qualified, to amend its articles of incorporation or to change the composition of its assets at the time to conform with the securities or blue sky laws of such jurisdiction, to take any action that would subject it to service of process in suits other than those arising out of the offer and sale of the USMX Stock covered by the Registration Statement or to subject itself to taxation in any jurisdiction where it has not theretofore done so. In the event of any registration under the Securities Act or any USMX Stock pursuant to this Agreement, USMX shall indemnify and hold harmless NPMC, any underwriter of NPMC, each officer, director, employee or agent of NPMC, and each other person if any, who controls NPMC or underwriter with the meaning of Section 15 of the Securities Act, against any losses, costs, claims, damages or liabilities, joint or several (or actions in respect thereof) ("Losses"), incurred by or to which each such indemnified party may become subject, under the Securities Act or otherwise, but only to the extent such Losses arise out of or based upon (i) any untrue D-6 statement or alleged untrue statement of any material fact contained, on the effective date thereof, in any Registration Statement under which such USMX Stock was registered under the Securities Act, in any preliminary prospectus (if used prior to the effective date of such Registration Statement) or in any final prospectus or in any post-effective amendment or supplement thereto (if used during the period USMX is required to keep the Registration Statement effective) (the "Disclosure Documents"), (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements made therein not misleading or (iii) any violation of any federal or state securities laws or rules or regulations thereunder committed by USMX in connection with the performance of its obligations under this Agreement; and USMX shall reimburse each such indemnified party for all legal or other expenses reasonably incurred by such party in connection with investigating or defending any such claims, including any amounts paid in settlement of any litigation, commenced or threatened; provided, however, that USMX shall not be liable to an indemnified party in any such case to the extent that any such Losses arise out of or are based upon (i) an untrue statement or alleged untrue statement or omission or alleged omission (x) made in any such Disclosure Documents in reliance upon and in conformity with written information furnished to USMX by or on behalf of such indemnified party specifically for use in the preparation thereof, (y) made in any preliminary or summary prospectus if a copy of the final prospectus was not delivered to the person alleging any loss, claim, damage or liability for which Losses arise at or prior to the written D-7 confirmation of the sale of such USMX Stock to such person and the untrue statement or omission concerned had been corrected in such final prospectus or (z) made in any prospectus used by such indemnified party if a court of competent jurisdiction finally determines that at the time of such use such indemnified party had actual knowledge of such untrue statement or omission or (ii) the delivery by an indemnified party of any prospectus after such time as USMX has advised such indemnified party in writing that the filing of a post-effective amendment or supplement thereto is required, except the prospectus as so amended or supplemented, or the delivery of any prospectus after such time as the obligation of USMX to keep the same current and effective has expired. Promptly after the receipt by any party hereto of notice of any claim, action, suit or proceeding by any person who is not a party to this Agreement (collectively, an "Action") which is subject to indemnification hereunder, such party (the "Indemnified Party") shall give reasonable written notice to the party from whom indemnification is claimed (the "Indemnifying Party"). The Indemnifying Party shall be entitled, at the sole expense and liability of the Indemnifying Party, to exercise full control of the defense, compromise or settlement of any such Action. The Indemnified Party shall cooperate with the party assuming the defense, compromise or settlement of any such Action in accordance herewith in any manner that such party reasonably may request. The Indemnified Party shall have the right to employ separate counsel and to participate in (but not control) the defense, compromise, or settlement thereof, but the fees and expenses of such counsel shall be the expense of the Indemnified Party. No Indemnifying Party D-8 shall settle or compromise any such Action in which any relief other than the payment of money damages is sought against any Indemnified Party unless the Indemnified Party consents in writing to such compromise or settlement, which consent shall not be unreasonably withheld. No Indemnified Party shall settle or compromise any such Action for which it is entitled to indemnification hereunder without the prior written consent of the Indemnifying Party, unless the Indemnifying Party shall have failed, after reasonable Notice thereof, to undertake control of such Action in the manner provided above in this provision. If the indemnification provided for above is unavailable to or insufficient to hold the Indemnified Party harmless as set forth above in respect of any Losses referred to therein for any reason other than as specified therein, then the Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and such Indemnified Party on the other in connection with the statements or omissions which resulted in such Losses, as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by (or omitted to be supplied by) USMX or NPMC (or underwriter) and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by an Indemnified Party as a result of the Losses referred to above in D-9 this Agreement shall be deemed to include any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. If the Indemnified Party is deemed to be partially liable in an Action, and such applicable liability is not subject to indemnification as set forth above, the "Partially Indemnified Party" shall be entitled to employ separate counsel, at its own expense, and shall have the right to participate in the defense of any Action. No compromise or settlement of any Action shall be entered into without the consent of the Partially Indemnified Party. D-10 EX-2 3 EXHIBIT 2 - USMX 2-5-96 LETTER EXHIBIT 2 USMX February 5, 1996 Mr. Gerald G. Booth President North Pacific Mining Corporation 2525 "C" Street, Suite 500 P.O. Box 93330 Anchorage, AK 99509-3330 Dear Jerry: As discussed at our October 26th meeting in Denver pertaining to the status of the Illinois Creek Project, USMX would like to be able to initiate production at Illinois Creek by the 3rd Quarter of 1996. I believe this is also the desire of NPMC. However, assuming a positive Feasibility Report is completed by the end of February 1996, USMX still cannot make a formal Production Decision until receipt of all required Approvals, currently expected in April 1996. If USMX were to make a Production Decision at that time, NPMC would not be required to make an election to either participate for a 25% working interest, or to receive a 5% royalty, until mid to late June of 1996. This uncertainty creates a problem for both companies. In order for the desired Illinois Creek production schedule to remain on track, USMX must begin making significant capital expenditures and contractual commitments in January 1996. As the Agreement is presently written, in the event NPMC were ultimately to elect to participate, it would have no liability for its share of such expenditures made prior to late June. Assuming that a positive Feasibility Report is completed or substantially completed in February 1996 which justifies a continued accelerated property Development schedule, USMX is willing to make the following proposal: 1. In the event that USMX's Board of Directors elects in the first half of February 1996, to initiate property Development (which election by USMX's Board is hereinafter referred to as the "Development Decision") which will include the making of expenditures related to engineering of the project, purchasing of equipment, entering into construction and mining contracts and engaging in related activities in preparation for the startup of production, and committing to production upon receipt of all required Approvals, presently anticipated in April 1996, assuming no material adverse change in project economic conditions subsequent to the Development Decision in February 1996, USMX shall make a non-refundable payment to NPMC of one million dollars in USMX common stock, cash, or a combination thereof (the "Development Decision Payment") in the same manner described in Section 4 of the Agreement for making the Production Decision Payment, excepting that the average closing price for purposes of payment in USMX shares shall be calculated for the thirty (30) trading days immediately preceding January 31, 1996; and excepting that the 2.5% limitation in section 4.2(b)(ii) shall not apply until and unless the $3 million balance of the Production Decision Payment becomes due and payable; and provided further that if USMX elects to make the Development Decision Payment in Shares, USMX shall thereupon take all of the actions as to said Shares as are required by Section 4 of the Agreement just as if the entire Production Decision Payment were then being made, including but not limited to the specific actions set forth in section 4.3. Upon receipt of all required Approvals, and assuming that no material adverse change in project economics has occurred subsequent to the effective date of the Development Decision, USMX shall make a Production Decision within 15 days after receiving all Approvals and shall pay to NPMC the balance of the Production Decision Payment (three million dollars in USMX common stock, cash, or a combination thereof as described in Section 4 of the Agreement). If USMX fails to make a Production Decision by December 31, 1996, and does not pay the balance of the Production Decision Payment by that date, then any participation election previously made by NPMC shall be null and void as of such date and NPMC shall be entitled to again exercise its full election rights in accordance with Section 5 of the Agreement when and if USMX does make a Production Decision. In consideration for the commitments set forth above, NPMC agrees that within 30 days after (a) the effective date of Notice of USMX's Development Decision, and (b) NPMC's receipt of the completed Feasibility Report and related information, whichever is last to occur, NPMC shall make its election as provided by Section 5 of the Agreement as amended hereunder to either: (i) receive a 5% Net Returns Royalty, or (ii) participate for a 25% working interest in which event, NPMC will, within 30 days after that election, reimburse USMX for 25% of the project expenditures (which shall not include the Development Decision Payment or the Production Decision Payment) incurred subsequent to the effective date of USMX's Development Decision. 2. It is also agreed between the parties that in the event that NPMC elects under paragraph 1 above to receive 5% Net Returns Royalty rather than to participate for a 25% working interest, and in the event that USMX at some future date may delineate the existence of additional ore reserves on the Illinois Creek Upland Mining Lease which increase the total proven ore reserves to at least one million ounces of equivalent gold ore reserves beyond the proven equivalent gold ore reserves stated in the Feasibility Report which forms the basis for USMX's Development Decision in 1996, NPMC shall have an additional opportunity to elect (within 60 days after receipt of USMX's notice of those additional reserves) to participate in subsequent mining operations with respect to those additional reserves for a 25% working interest by reimbursing USMX 120% of NPMC's 25% share of the Exploration, Development and capital costs (which shall not include the Development Decision Payment or the Production Decision Payment) incurred by USMX subsequent to the effective date of its 1996 Development Decision, and which are directly related to the delineation and/or production of the additional reserves. We believe that this proposal is equitable for both parties. USMX is willing to take the near-term financial risk necessary to seek a late 1996 production date, if NPMC will make an early decision with respect to participation and reimburse USMX for NPMC's share of the cost incurred subsequent to the effective date of the 1996 Development Decision by USMX, in the event NPMC decides to make such participation election. The magnitude of such a financial commitment by USMX prior to NPMC's election will be substantial. Under this proposed scenario, both companies' goals should be attainable. I also wish to note that under the terms of the Agreement, NPMC, CIRI and their affiliates have been given the opportunity to bid on the contracts for work in connection with all Operations for the proposed Illinois Creek project. It is anticipated that the bids by such entities will be competitive, and that such bids will be considered in good faith by USMX. If the terms of this letter are acceptable to NPMC, please so indicate by signing a copy and returning it to USMX, and we will consider the Agreement to be revised as specifically set forth in this letter. All other terms and conditions of the Agreement shall remain unchanged and in full force and effect and nothing herein shall accelerate the Transfer Date or constitute a waiver or relinquishment of any of such other terms and conditions by either NPMC or USMX unless specifically set forth in this letter. Capitalized terms used in this letter have the same definitions as provided in the Agreement, unless otherwise herein clearly indicated. Sincerely, USMX, INC. /s/ James A Knox President JAK395/caw Accepted this 12th day of February, 1996. /S/ - -------------------------------------------- Gerald G. Booth, President North Pacific Mining Corporation EX-3 4 EXHIBIT 3 - USMX 4-22-97 LETTER EXHIBIT 3 USMX, INC. 141 UNION BLVD., SUITE 100 LAKEWOOD, CO 80228 April 22, 1997 VIA FACSIMILE (907) 263-7070 Mr. Michael O'Connor, President Peak Oilfield Service Company 2525 C Street, Ste. 201 Anchorage, Alaska 99503 Dear Mike: The purpose of this letter is to confirm the various discussions among you and other representatives of Peak Oilfield Service Company ("Peak"), USMX, Inc. and its subsidiary, USMX of Alaska, Inc. (collectively, "USMX"), and Dakota Mining Corporation ("Dakota"), which have culminated in our agreement resolving the dispute regarding services rendered by Peak to USMX on the Illinois Creek Project in Alaska pursuant to that certain Extraction and Installation Contract, C-90-0302 (the "Contract") between Peak and USMX. The objective of our discussions has been the consummation of a definitive settlement agreement which, among other things, would provide for the following material terms: 1. USMX and Dakota agree to pay Peak an aggregate of $5 million in cash and securities in full settlement of Peak's claims pursuant to the Contract; provided, however, that any obligation of Dakota shall accrue only upon the consummation of the Merger (as defined below). The $5 million will be paid as follows: (a) $1,772,000 has been paid by USMX to Peak, receipt of which is acknowledged by Peak; (b) An additional cash payment of $445,598 will be made by USMX no later than one business day after execution of this agreement; (c) An additional cash payment of $1,782,396 will be made by USMX with funds provided by Dakota, plus interest at 9% per annum which shall accrue from April 11, 1997, immediately upon completion of the merger between USMX and Dakota (the "Merger"), but which Merger shall be completed not later than June 15, 1997; and (d) The issuance of 1,000,000 shares of USMX's common stock, par value $.001 ("USMX Stock") to Peak, such shares to be duly authorized, fully paid and non-assessable. The USMX Stock will be issued to Peak immediately prior to the execution of the closing documents in connection with the Merger which is expected to occur on or about May 29, 1997, subsequent to the meetings of shareholders of USMX and Dakota which have been called to approve the Merger. The USMX Stock will be restricted upon issuance, but a sufficient number of shares of Dakota common stock will be registered in the Registration Statement covering the Merger for issuance to Peak in exchange for the Mr. Michael O'Connor April 22, 1997 Page 2 USMX Stock. It is our understanding Peak would be able to immediately resell the shares of Dakota common stock it would receive in the Merger on The Toronto Stock Exchange. Dakota shall provide an opinion of nationally recognized counsel acceptable to Peak that such shares may be resold without restriction under United States or Canadian law by Peak on The Toronto Stock Exchange. In addition, Peak would be able to resell such shares on the American Stock Exchange in the U.S., subject only to certain limitations prescribed by SEC rules. Dakota shall provide an opinion of nationally recognized counsel acceptable to Peak that such shares may be resold in the U.S. by Peak subject to the limitations of Rule 145 of the Securities Act of 1933, as amended. In addition, to the extent that Peak determines it necessary to have totally unrestricted trading privileges on the American Stock Exchange, Dakota will, upon request by Peak, use its best efforts to file and have declared effective a Registration Statement covering the resale in the U.S. of the Dakota common stock owned by Peak and deliver an opinion of nationally recognized counsel acceptable to Peak as to the registration of such shares. Dakota's out-of-pocket expenses of registration will be reimbursed by Peak; provided, that, such reimbursement shall be limited to a maximum of $25,000. The settlement agreement shall provide for standard representations and warranties to be made by USMX and Dakota to Peak in connection with the registration of such shares and by USMX and Dakota to Peak and by Peak to USMX and Dakota in connection with the entry into such settlement agreement and for indemnification of Peak in connection with the registration of such shares. The obligation of Dakota to file a Registration Statement and provide unrestricted trading privileges shall remain in effect until Dakota provides an opinion of nationally recognized counsel acceptable to Peak that such shares may be traded without restriction in the absence of any Registration Statement. 2. It will be provided in the settlement agreement that Peak will protect, preserve and maintain its liens until full payment is made as set forth above. USMX and Dakota recognize that this may require Peak to file a lawsuit against USMX prior to May 7, 1997. The parties will seek to stay such lawsuit to provide reasonable opportunity to finalize the settlement agreement. Such action will be without waiver of rights by any party to assert any claims or defenses in the lawsuit. Upon full payment, the liens would be released. In addition, the settlement agreement will provide for mutual releases of all claims between Peak and USMX and Dakota related to the Contract. 3. If the Merger is not consummated by June 15, 1997, USMX would be provided the right for a 60-day period thereafter to pay Peak solely in cash the amount of $2,782,396, plus interest at the rate of 15% per annum from June 15, 1997. If such payment were not timely made, then Peak may choose to either (a) file a confession of judgment against USMX the form of which will be attached as an exhibit to the settlement agreement with respect to the unpaid balance of $2,782,396, plus interest or (b) rescind the settlement agreement and reassert its original claims in which case USMX could reassert its objections to such claims; provided, however, that Peak shall be entitled to retain the $445,598 paid pursuant to this letter agreement and the $1,772,000 previously paid to Peak which amounts would be credited to unpaid amounts under the Contract. 4. This letter is intended to form a binding agreement between the parties who shall in good faith seek to negotiate a definitive settlement agreement by May 4, 1997. Mr. Michael O'Connor April 22, 1997 Page 3 Upon the execution by you and return to us of this letter, we shall instruct our respective counsel to cooperate in the preparation of a definitive settlement agreement containing provisions substantially in accord with the foregoing, together with such further appropriate terms and conditions as our counsel may mutually determine. The settlement agreement shall be subject to the approval of all parties. If the foregoing correctly sets forth our agreement in principle, please so signify by signing and returning this letter to USMX and Dakota. It is understood that the respective specific rights and obligations of all parties remain to be defined in the definitive settlement agreement into which this letter and all prior discussions shall merge. Thank you very much for your consideration and cooperation. Very truly yours, USMX, INC. and USMX of Alaska, Inc. By: /s/ -------------------------------- Authorized Officer AGREED AND ACCEPTED: DAKOTA MINING CORPORATION By: /s/ -------------------------------- Authorized Officer Mr. Michael O'Connor April 22, 1997 Page 4 AGREED AND ACCEPTED: PEAK OILFIELD SERVICE COMPANY By: /s/ -------------------------------- Authorized Officer -----END PRIVACY-ENHANCED MESSAGE-----