-----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, GmHtIwMc/1CpKNDPpOF98D7ecTev9M03Y0CjaIrFRW0QSX7oCGrVMCBmUDla3a1S Hpkpwyw0b/sY+ykXZZlbMA== 0000315523-96-000010.txt : 19960603 0000315523-96-000010.hdr.sgml : 19960603 ACCESSION NUMBER: 0000315523-96-000010 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960624 FILED AS OF DATE: 19960531 SROS: NASD FILER: 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: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-09370 FILM NUMBER: 96575296 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 DEF 14A 1 USMX, INC. NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 24, 1996 TO THE STOCKHOLDERS OF USMX, INC.: NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of USMX, INC. (the Company) will be held at the Sheraton Denver West Hotel, 360 Union Boulevard, Lakewood, Colorado on June 24, 1996, at 3:00 p.m. local time to consider the following matters: 1. The election of two directors to Group II, to serve until the annual meeting of stockholders in 1999 and until their successors shall have been duly elected and qualified; 2. To transact such other business as may properly come before the meeting or any adjournments thereof. Stockholders of record at the close of business on May 24, 1996, shall be entitled to notice of and to vote at the Annual Meeting or any adjournments thereof. The stock transfer books of the Company will remain open. The management of the Company hopes that you will find it convenient to attend the meeting in person. In any event, please mark, sign, date and return the enclosed Proxy to make sure that your shares are represented at the meeting. Stockholders who attend the meeting may vote their shares personally even though they have returned Proxies. There is printed on the following pages a Proxy Statement to which your attention is invited. BY ORDER OF THE BOARD OF DIRECTORS: /s/ Donald E. Nilson Donald E. Nilson, Secretary Dated: May 24, 1996 USMX, INC. 141 Union Boulevard, Suite 100 Lakewood, Colorado 80228 PROXY STATEMENT This Statement is furnished in connection with the solicitation of Proxies by and on behalf of the Board of Directors of USMX, Inc., a Delaware corporation (the Company or USMX), for use at the Annual Meeting of Stockholders to be held at 3:00 p.m, local time, on June 24, 1996, at the Sheraton Denver West Hotel, 360 Union Boulevard, Lakewood, Colorado or at any adjournments thereof. The Company anticipates that this Proxy Statement and the accompanying form of Proxy will be first mailed or given to the stockholders of the Company on or about May 28, 1996. The Company's Annual Report to Stockholders, including financial statements, for the year ended December 31, 1995, accompanies this Proxy Statement, but does not form a part of the proxy solicitation materials. The cost of soliciting Proxies will be borne by the Company. Officers and regular employees of the Company, without compensation other than their regular compensation, may solicit Proxies by further mailing, by telephone and by telegraph and by personal conversations. The Company will reimburse brokerage firms and others for their expenses in forwarding solicitation material to the beneficial owners of common stock. The Company has no plans to retain any firms, or otherwise incur any extraordinary expense, in connection with the solicitation of stockholders. Voting Procedures Stockholders of record at the close of business on May 24, 1996, ("Record Date") will be entitled to vote at the meeting. On such Record Date, the Company had outstanding and entitled to vote 14,643,519 shares of common stock. Each stockholder is entitled to cast one vote for each share of common stock registered in such stockholder's name on the books of the Company held on the Record Date. The presence in person or by proxy of the holders of one-third of the shares of the Company is necessary to constitute a quorum at the Annual Meeting. Any Proxy may be revoked by the person giving it at any time before it has been exercised or by attending the meeting and voting in person. Revocation in writing is the sole means by which Proxies may be revoked. Proxies may be revoked by execution of a later dated Proxy or by written notice to the Secretary of the Company at the Company's address above before the Annual Meeting or by a personal vote at the Annual Meeting of Stockholders. Unless instructed to the contrary in the Proxies, the Proxies will be voted for the persons named below in the election of the Company's Board of Directors, and will be voted in the discretion of the Proxies on such other matters as may properly come before the meeting. The Company does not know of any other matters to come before the meeting. Pursuant to applicable Delaware law, only votes cast "for" a matter constitute affirmative votes. Votes "withheld" or abstaining from voting are counted for quorum purposes, but as they are not cast "for" a particular matter, they will have the same effect as negative votes or votes "against" a particular matter. Voting Securities and Principal Holders The number of shares of the Company's common stock beneficially owned as of May 17, 1996, by each of the directors and nominees is stated opposite each individual's name in ELECTION OF DIRECTORS. The number of shares of the Company's common stock beneficially owned by all directors and officers of the Company as a group is stated at the end of the list of directors in ELECTION OF DIRECTORS. Security Ownership of Certain Beneficial Owners The following table sets forth information as of May 17, 1996 with respect to any person who is known to the Company to be the beneficial owner of more than five percent of any class of the Companys voting securities:
Title of Name and Address of Amount and Nature Percent Class Beneficial Owner of Beneficial of Class Ownership - --------- ---------------------------- ----------------- --------- Common Pegasus Gold Inc. 601 West First Avenue, Suite 1500 Spokane, WA 99204 4,826,000 (1) 33.0% Common Van Eck Associates Corporation 122 East 42nd Street New York, New York 10168 1,045,000 (2) 7.1% (1) Represents direct ownership. (2) Van Eck Associates Corporation has advised the Company that it is a registered investment adviser, and that such shares are held for funds or trusts managed by it, including 715,000 shares (4.9%) held for Gold/Resources Fund and 275,000 shares (1.9%) held for International Investors Incorporated and 55,000 shares (0.4%) for a private investor. Gold/Resources Fund and International Investors Incorporated are open end, diversified investment management companies which concentrate investments in gold mining shares. The shares of both of such companies are publicly held and Van Eck Associates Corporation has advised the Company that to its knowledge no natural person owns beneficially more than 5% of the outstanding shares of either such company. John C. Van Eck, whose business address is the same as that of Van Eck Associates Corporation, has voting control of Van Eck Associates Corporation.
Security Ownership of Management Information regarding the Companys equity securities owned by directors and executive officers is set forth in the following table:
Shares of $0.001 Par Percent Value Common Stock of Name Beneficially Owned Class ---------------------- --------------------- ---------- George J. Allen 32,000 (2) * Phillips S. Baker 4,841,000 (4) (7) 31.9 % Donald P. Bellum 25,000(1) * James P. Geyer 4,836,000 (5) (7) 31.9 % James A. Knox 333,899 (6) 2.2 % Dennis L. Lance 157,068 (8) 1.0 % Terry P. McNulty 33,000 (2) * Werner G. Nennecker 4,851,000 (1) (7) 32.0 % Donald E. Nilson 60,584 (9) * Gregory Pusey 297,274 (4) 2.0 % Robert Scullion 21,750 (3) * Paul B. Valenti 114,783 (10) * All directors and executive officers as a group 5,951,358 (7) (11) 39.2 % (1) Includes 25,000 shares underlying currently exercisable options granted pursuant to the Companys Non-Discretionary Stock Option Plan For Non-Employee Directors. Does not include options recently granted to Mr. Bellum, which are not currently exercisable. See Employment Contracts and Termination of Employment and Change in Control Arrangements. (2) Includes 20,000 shares underlying currently exercisable options granted pursuant to the Companys Non-Discretionary Stock Option Plan For Non-Employee Directors. (3) Includes 21,750 shares underlying currently exercisable options granted pursuant to the Companys Non-Discretionary Stock Option Plan For Non-Employee Directors. (4) Includes 15,000 shares underlying currently exercisable options granted pursuant to the Companys Non-Discretionary Stock Option Plan For Non-Employee Directors. (5) Includes 10,000 shares underlying currently exercisable options granted pursuant to the Company's Non-Discretionary Stock Option Plan For Non-Employee Directors. (6) Includes 206,667 shares underlying currently exercisable options granted pursuant to the Companys 1987 Stock Option Plan. (7) Messrs. Nennecker , Baker , and Geyer are officers and Mr. Nennecker is a director of Pegasus. As such, they can be considered to be beneficial owners of the 4,826,000 shares held of record by Pegasus. Accordingly, the figures opposite their names reflect the 4,826,000 shares owned by Pegasus. (8) Includes 68,334 shares underlying currently exercisable options granted pursuant to the Companys 1987 Stock Option Plan. (9) Includes 38.334 shares underlying currently exercisable options granted pursuant to the Companys 1987 Stock Option Plan. (10) Includes 58,334 shares underlying currently exercisable options granted pursuant to the Companys 1987 Stock Option Plan. (11) Includes currently exercisable options to purchase 523,419 shares. * Represents less than 1%.
Election of Directors The Board of Directors of the Company (the Board) is divided into three Groups, with the terms of office of each Group ending in successive years. The terms of directors of Group II expire with this Annual Meeting. The directors of Group I and Group III will continue in office. Proxies will be voted at the Annual Meeting, unless authority is withheld, FOR the election of the persons in Group II named below. Each of the nominees currently is a director of the Company. There is no nominating committee of the Board. The affirmative vote of a majority of the shares represented at the Annual Meeting is required to elect each director. The Company does not contemplate that any of the persons named below will be unable or will decline to serve. However, if any such nominee is unable or declines to serve, the persons named in the accompanying Proxy will vote for a substitute, or substitutes, at their discretion. The following information is submitted respecting the nominees for election and other directors of the Company: NOMINEES FOR DIRECTOR GROUP II FOR THREE YEAR TERM EXPIRING 1999
Director Name and Business Experience Since Phillips S. Baker, age 36, joined Pegasus Gold in January 1994 as Vice President, Finance and Chief Financial Officer. Prior to joining Pegasus, Mr. Baker worked seven years for Battle Mountain Gold Company, most recently as Treasurer. He also worked as an accountant for Arthur Andersen LLP. Mr. Baker is an Attorney, Certified Public Accountant and Certified Cash Manager. 1995 Terry P. McNulty, age 57, has served as President of T.P. McNulty & Associates, a consulting firm, since 1988. From 1983 to 1988, he was President of Hazen Research, Inc. 1990 MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE GROUP I THREE YEAR TERM EXPIRING 1998 George J. Allen, age 67, has served as President of Allen Engineering since 1983. From 1951 to 1983, he served in various positions with Kennecott Corporation, including Vice President and Director of Tolling. 1990 Werner G. Nennecker, age 41, joined Pegasus Gold Inc. in September 1992 as Senior Vice President and Chief Operating Officer. In November 1992, Mr. Nennecker assumed the position of President and Chief Executive Officer of Pegasus. Prior to joining Pegasus, Mr. Nennecker worked 15 years in the mining industry with Ranchers Exploration and Santa Fe Pacific Gold Corporation. Most recently, he held the positions of Executive Vice-President of Santa Fe Pacific Minerals Corporation and President of Santa Fe Pacific Gold Corporation. He has extensive experience in all aspects of the mining business. Mr. Nennecker is also a director of Pegasus Gold Inc., Zapopan NL, the Gold Institute, and the National Mining Hall of Fame. 1992 Robert Scullion, age 56, has been a partner in Scullion, Strasheim & Company, a firm of Certified Public Accountants, since 1975. He is a Certified Public Accountant licensed in the United States as well as a Scottish Chartered Accountant. 1987 MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE GROUP III THREE YEAR TERM EXPIRING 1997 Donald P. Bellum, age 63, has over 35 years of experience in the mining industry and related fields. Mr. Bellum currently serves as a consultant to the mining industry. Effective May 1, 1996, he became Chairman of the Board of Directors and Chief Executive Officer of the Company. From 1987 to 1991, Mr. Bellum was Executive Vice President of Cyprus Minerals Company. He served as President of Cyprus Coal Company from 1978 to 1987. From 1974 to 1978, Mr. Bellum was Vice President of Operations for Tesoro Coal Company. Mr. Bellum served as Project Manager (1965 to 1969) and as Mine Manager (1969 to 1973) for Kennecott Copper Corporation. 1992 James P. Geyer, age 43, joined Pegasus Gold in 1987 and was appointed Vice President, Operations in October 1995. Prior to joining Pegasus, Mr. Geyer worked 13 years for ASARCO and AMAX in various operating and engineering positions. Mr. Geyer is a mining engineer from the Colorado School of Mines. Mr. Geyer is a Director of Wheaton River Minerals Ltd. 1996 Gregory Pusey, age 44, served as the Companys Chief Financial Officer from May 1989 until January 1990 and he also has served as Secretary and Treasurer of the Company. Since 1983, Mr. Pusey has been engaged in private investment activities. He has served as President of Livingston Capital, Ltd. And President of the General Partner of Graystone Capital, Ltd, a venture captial firm. He is also President and a Director of Cambridge Holdings, Ltd. and a Director of Nutrition For Life International, Inc. Mr. Pusey was a founder of the Company. 1979
The Board of Directors held seven meetings in person or by consent during the year ended December 31, 1995. All incumbent directors attended at least 75 percent of the meetings of the Board held during the period for which they served as directors. The Company's Board of Directors had two standing committees in 1995: the Audit Committee and the Compensation Committee. The members of the Audit Committee are Terry P. McNulty and Robert Scullion. The primary functions of the Audit Committee are to review the scope and results of audits by the Company's independent auditors, internal accounting controls, non-audit services performed by the independent accountants and the cost of accounting services. Although members of the Audit Committee had informal discussions, the Audit Committee held no formal meetings in 1995. The Compensation Committee determines matters related to compensation payable to the Company's executive officers and administers the Companys 1987 Stock Option Plan. The members of the Compensation Committee during 1995 were George J. Allen, Donald P. Bellum and Gregory Pusey. The Compensation Committee held two meetings in 1995. In April 1996, Mr. Bellum resigned as a member of the Compensation Committee and Werner G. Nennecker was elected to serve as a member of the Compensation Committee. In May 1996, Mr. Bellum became Chairman of the Board of Directors and Chief Executive Officer of the Company. Executive Officers Set forth below are the names and offices held by each of the executive officers of the Company:
Name and Business Experience Offices Held - ------------------------------------------------- ------------------- James A. Knox, age 62, has served as President of President, Chief the Company since June 1991. He will remain in Executive Officer, this position until June 30, 1996. It is Chairman anticipated that he will thereafter concentrate his duties in the areas of acquiring mineral properties and mining operations for the Company. From 1969 until June 1991, he was an officer and director of Knox, Kaufman, Inc. That firm provided geological consulting services and managed exploration programs in the United States and Western Canada. Mr. Knox has previously been employed as a geologist with several other companies, including The Superior Oil Company where he was a district Exploration Manager, and Kermac Nuclear Fuels Corporation where he also managed the exploration efforts. Paul L. Blair, age 54, joined the Company in April Vice President -- 1995. Mr. Blair has 35 years experience in the Operations for Latin mining industry. He served as President and America and the General Manager of Golden Queen Mining Co., Inc. Caribbean from December 1993 to April 1995. For the preceding seven years, Mr. Blair served as General Manager of Cactus Gold Mines Co. Dennis L. Lance, age 51, has served as Vice Vice President -- President -- Exploration of the Company since May Exploration 1989. He also served as Secretary of the Company from January 1990 to December 1990. He has served as a geologist with the Company since June 1986. Prior thereto, he was an independent consulting geologist. Donald E. Nilson, age 51, has served as Vice Vice President -- President--Finance and Secretary of the Company Finance and Secretary since his employment in October 1990. Mr. Nilson has been a Certified Public Accountant since 1968 and holds a graduate degree in Computer Information Systems. Paul B. Valenti, age 46, joined the Company in May Vice President -- 1987 and was elected Vice President in August Operations 1988. From November 1983 to May 1987, he served as the Metallurgy Manager for Silver King Mines.
There are no family relationships among the officers or directors. On May 1, 1996 Donald P. Bellum became Chairman of the Board of Directors and Chief Executive Officer of the Company. Mr. Bellum previously served as a director of the Company. Biographical information concerning Mr. Bellum is set forth under "Directors" above. Executive Compensation Following is information regarding compensation paid during each of the last three completed fiscal years to the executive officers of the Company whose salary and bonus exceeded $100,000 during 1995. Summary Compensation Table
Annual Compensation ---------------------------- Long Term Name and Compensat All Other Principal ion Compen Position Awards sation Year Salary ($) Bonus ($) (Options#) ($) - -------------- ----- ---------- --------- ---------- --------- James A. Knox, President and CEO 1995 $156,050 $10,000 50,000 $4,620(1) 1994 $151,500 $20,000 30,000 $4,022(1) 1993 $142,500 $25,000 30,000 $4,069(1) Dennis L. Lance, V.P. -- Exploration 1995 $107,100 - 25,000 $3,213(1) 1994 $93,816 $8,000 15,000 $2,814 1993 $89,256 $16,227 15,000 $2,678 Donald E. Nilson, V.P. -- Finance 1995 $105,100 - 25,000 $3,153(1) 1994 $95,530 $8,000 15,000 $2,790(1) 1993 $91,719 $10,000 15,000 $2,741(1) Paul B. Valenti, V.P. -- Operations 1995 $108,150 - 25,000 $3,244(1) 1994 $98,650 $8,000 15,000 $2,959(1) 1993 $96,230 $13,050 15,000 $2,887(1) (1) The amounts shown represent the Company's matching contribution for the stated individuals to its 401(K) plan.
The following table sets forth information with respect to stock options granted during 1995 to each executive named in the Summary Compensation Table. The assumed annual rates of stock price appreciation of 5% and 10% are set by a rule of the Securities and Exchange Commission, and are not intended as a forecast of possible future appreciation and stock prices. The potential value of options granted depends on an increase in the market price of the Company's common stock. If the stock price does not increase, the options would be worthless. If the stock price does increase, this increase would benefit both option holders and stockholders commensurately. Option Grants in 1995
Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term -------------------------- % of Total Options Granted to Options Employees Exercise Granted in Fiscal Price Expiration Name (#) Year ($/Sh) Date 5% ($) 10% ($) - --------- -------- ----------- ---------- ------------ ----------- ------------ James A. Knox 50,000 13.2 % $2.19 3/14/2005 $68,864 $174,515 Dennis L. Lance 25,000 6.6 % $2.19 3/14/2005 $34,432 $87,257 Donald E. Nilson 25,000 6.6 % $2.19 3/14/2005 $34,432 $87,257 Paul B. Valenti 25,000 6.6 % $2.19 3/14/2005 $34,432 $87,257 All Stock- holders(1) $20,168,000 $51,110,000 Executive officers' gain as a % of All Stock- holders gain 0.85% 0.85% (1) The amounts shown for All Stockholders represent the potential realizable value assuming appreciation at the rates indicated based on the exercise price per share and the expiration date applicable to grants made in 1995 and the number of outstanding shares on the date of grant.
The following table sets forth, in the aggregate, the number of shares underlying options exercised during 1995 by each executive named in the Summary Compensation Table, and states the value at year-end of exercisable and unexercisable options remaining outstanding. Aggregated Option Exercises and Fiscal Year-End Option Values
Value of Number of Unexercised Shares Unexercised In-the-Money Acquired Options at FY- Options at on Value End (#) FY-End ($) Exercise Realized Exercisable/ Exercisable/ Name (#) ($) Unexercisable Unexercisable - --------------- --------- --------- -------------- -------------- James A. Knox - - 190,000 / $9,000 / 50,000 - Dennis L. Lance - - 60,000 / $1,800 / 25,000 - Donald E. Nilson - - 30,000 - 25,000 - Paul B. Valenti - - 50,000 / $900 / 25,000 -
Compensation of Directors All directors who are not employed either by the Company or by Pegasus are paid a fee of $350 for each meeting of the Board attended. In addition, each director who is not a full-time employee of the Company receives a fee of $500 per month. These directors also receive additional compensation plus reasonable expenses for any additional services performed. Robert Scullion is paid an additional $4,000 per year as chairman of the Audit Committee. During 1995, certain directors were paid a total of $6,344 for consulting fees and out of pocket expenses pertaining to various Company projects. Employment Contracts and Termination of Employment and Change-in-Control Arrangements During 1995 James A. Knox was employed by the Company as its President and Chief Executive Officer. Mr. Knox continued to serve as Chief Executive Officer until May 1, 1996, and will continue to serve as President until June 30, 1996. Thereafter, Mr. Knox is expected to concentrate his duties in the areas of acquiring mineral properties and mining operations for the Company. In July 1993, the Company entered into an Employment Agreement with Mr. Knox for a two-year term which ended June 30, 1995, which provided for a minimum annual salary of $150,000. Upon Mr. Knoxs termination of employment with the Company, he will receive severance pay at 50% of his present annual salary and the Company will pay his medical insurance premiums for six months after the date of termination. Mr. Knox has agreed not to acquire, for two years after the termination of the Employment Agreement, an interest in any mineral properties within two miles of any properties in which the Company has an interest or is, on the date of termination, negotiating to acquire an interest. On May 1, 1996, Donald P. Bellum became Chairman of the Board of Directors and Chief Executive Officer of the Company. Mr. Bellum receives a salary of $16,800 per month and has been granted an option to purchase up to 150,000 shares of the Companys common stock at $2.55 per share. The options vest in annual installments of 50,000 shares each commencing on the date of grant, except that no options may be exercised until six months from the date of grant. Vesting would occur in the event of termination of Mr. Bellums employment without cause. This would include a change in control wherein the Companys executive offices were relocated or his duties were changed in a substantial manner. Compensation Committee Interlocks and Insider Participation in Compensation Decisions George J. Allen, Donald P. Bellum and Gregory Pusey served as members of the Compensation Committee during 1995. Mr. Pusey is a former officer of the Company. In April 1996, Mr. Bellum resigned as a member of the Compensation Committee and Werner G. Nennecker was elected to serve as a member of the Compensation Committee. Effective May 1, 1996, Mr. Bellum became Chairman of the Board of Directors and Chief Executive Officer of the Company. Board Compensation Committees Report on Executive Compensation The compensation policies of the Compensation Committee applicable to the Company's executive officers are based on the continuing need to attract and retain a management team capable of guiding the growth of the Company over the long term. Compensation of executive officers paid during 1995 is based on the qualifications and experience of the individual officers, competitive market conditions for executive talent, and the contributions of the individuals to the long term growth and stability of the Company and to maximizing the long term value of stockholders' investment in the Company. Factors considered by the Compensation Committee to be important in the long term growth and stability of the Company and to maximizing the long term value of the stockholders' investment include increasing the quantity and quality of the Company's portfolio of exploration properties, development of these properties into producing mines where justified, acquisition and improvement of producing properties, increasing the amount and timeliness of internal and external financial reporting and building and maintaining a complement of well trained and highly motivated employees. The Compensation Committee also compared salaries and bonuses with those paid by other gold mining companies. The Company's Compensation Committee did not make its determinations based specifically upon objective measures of corporate performance in 1995 such as revenue or net income, nor did that Committee set any targets of performance using such objective measures. The Committee believes that, for a growing exploration and mining company, primary emphasis should be placed on the exploration and development of mining properties with superior potential that will ultimately result in the achievement of improved financial results, through mineral production or property sale. The Committee considered the performance of the Company's CEO and other executive officers during 1995 as well as other factors discussed above in making its compensation decisions. The salary paid by the Company to James A. Knox for his services as President and Chief Executive Officer during most of 1995 was in accordance with the Employment Agreement which the Company entered into with Mr. Knox in July of 1993. During 1995 Mr. Knox was granted an option to purchase up to 50,000 shares of the Company's common stock. The number of options granted to Mr. Knox and the other executive officers was based on the Compensation Committee's assessment of the officers performance and a review of similar benefits offered by other gold mining companies. The exercise price for all options granted in 1995 was the fair market value of the stock on the date of grant. George J. Allen Donald P. Bellum Gregory Pusey Performance Graph Graph showing the performance of USMX, Inc. Stock as compared with the NASDAQ Stock market and the S & P Gold Mining Index The above graph assumes an initial investment of $100 as of the close of trading December 31, 1990. Each of the data points gives the dollar value of the investment from December 31, 1990, forward assuming dividends, where paid, are reinvested monthly plus any price change in the investment. Transactions with Management and Others As of December 31, 1995, the Company had provided collateral in the form of Certificates of Deposit totaling approximately $283,000 to secure repayment of bank loans to four employees of the Company including two officers (Paul B. Valenti - $114,408 and Donald E. Nilson - $52,778). The employees have pledged a total of 134,439 shares of the Companys common stock to the Company to secure repayment of these obligations. In March 1995, the Company acquired all of the outstanding capital stock of Mega Minerals S.A., an Ecuadorian company. The Company assumed obligations of approximately $120,000, and agreed to pay the seller a 10% net proceeds royalty on any production from the concessions after recovery of all capital expenditures. Gregory Pusey, a director and principal shareholder of the seller, is also a director of the Company. The assets of Mega Minerals S.A. consist of eight exploration concessions and the rights to acquire four additional exploration concessions, all located in the Nambija-Zamora gold belt of southern Ecuador. Relationship with Independent Certified Public Accountants The firm of KPMG Peat Marwick LLP was engaged to audit the financial statements of the Company for the year ended December 31, 1995. A representative of KPMG Peat Marwick LLP is expected to be present at the meeting and available to respond to appropriate questions and, although the firm has indicated that no statement will be made, an opportunity for a statement will be provided. Management has not made an appointment of auditors for 1996 but anticipates that it will appoint KPMG Peat Marwick LLP. Section 16 Reporting Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's officers and directors, and persons who own more than 10% of a registered class of the Company's equity securities, to file reports of ownership and changes in ownership to the Securities and Exchange Commission. Officers, directors and greater than 10% stockholders are required by the regulations of the Securities and Exchange Commission to furnish the Company with copies of all Section 16(a) reports they file. Based solely on its review of copies of such reports received by it and written representations from certain reporting persons that no other reports were required for those persons, the Company believes that all filing requirements applicable to its officers, directors and greater than 10% stockholders were complied with for the fiscal year ended December 31, 1995. Stockholder Proposals Any proposal which a stockholder may desire to present to the Annual Meeting of Stockholders for the year ending December 31, 1996, must be received in writing by the Secretary of the Company prior to December 1, 1996. Other Matters The Board does not know of any other matters to be brought before the meeting. However, if any other matters should properly come before the meeting, it is the intention of the persons named in the accompanying proxy to vote such Proxy as in their discretion they may deem advisable. BY ORDER OF THE BOARD OF DIRECTORS /s/ Donald E. Nilson Donald E. Nilson, Secretary Dated: May 24, 1996 -----END PRIVACY-ENHANCED MESSAGE-----