CRESTED CORP.
Minerals Plaza, Glen L. Larsen Building
877 North 8th West
Riverton, Wyoming 82501
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held On Friday, December 13, 1996
TO THE SHAREHOLDERS OF CRESTED CORP:
PLEASE TAKE NOTICE that the Annual Meeting of Shareholders of Crested
Corp., a Colorado corporation (the "Company" or "Crested"), will be held at
the Company's executive offices, 877 North 8th West, Riverton, Wyoming 82501
on Friday, December 13, 1996 at 10:00 a.m., local time, or at any adjournments
thereof, for the purpose of acting upon:
1. The election of five directors to serve until the next annual meeting
of shareholders, and until their successors have been duly elected or
appointed and qualified; and
2. Such other business as may properly come before such meeting.
Only shareholders of record at the close of business on Thursday, October
3, 1996 will be entitled to notice of and to vote at the Annual Meeting or any
adjournments thereof. The Company's transfer books will not be closed for the
Meeting.
A list of shareholders entitled to vote at the Meeting will be available
for inspection by any record shareholder at the Company's principal executive
offices in Riverton, Wyoming. The inspection period will begin no later than
ten days before the Meeting.
By Order of the Board of Directors
s/ Daniel P. Svilar
DANIEL P. SVILAR, Secretary
Please date, sign and return your Proxy so that your shares may be voted
as you wish, and to assure quorum. The prompt return of your signed Proxy,
regardless of the number of shares you hold, will aid the Company in reducing
the expense of additional Proxy solicitation. The giving of such Proxy does
not affect your right to vote in person should you attend the Meeting.
YOUR VOTE IS IMPORTANT
Dated: November 10, 1996
CRESTED CORP.
Minerals Plaza, Glen L. Larsen Building
877 North 8th West
Riverton, Wyoming 82501
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FRIDAY, DECEMBER 13, 1996
The enclosed Proxy is solicited by the Board of Directors (the "Board")
of Crested Corp. (the "Company" or "Crested") for use at the Annual Meeting of
Shareholders to be held at 10:00 a.m. local time on Friday, December 13,
1996. It is expected that the Notice of Meeting, Proxy Statement and Proxy
will be mailed to record shareholders on or about November 15, 1996.
REVOCABILITY OF PROXY
The Proxy may be revoked at any time, to the extent it has not been
exercised, by: (i) written revocation; (ii) executing a later-dated Proxy and
delivering it to the Company; (iii) requesting (in writing) a return of the
Proxy; or (iv) the shareholder voting in person at the Meeting.
VOTING OF PROXY
If the enclosed Proxy is executed and returned, it will be voted as
indicated by the shareholder on the proposals. Unless otherwise instructed to
the contrary in the Proxy, the appointees named in the Proxy will:
1. VOTE FOR the five management nominees to the Board; and
2.VOTE in accordance with their best judgment on any other matters that
may properly come before the Meeting.
As of the date of the Notice of Meeting and Proxy Statement, management of the
Company has no knowledge of any other matters that may be brought before the
Meeting.
SOLICITATION
The costs of preparing, assembling and mailing the Notice of Meeting,
Proxy Statement, Proxy (collectively the "Proxy Materials"), as well as
solicitation of the Proxies and miscellaneous costs with respect to the same,
will be paid by the Company. The solicitation is to be made by use of the
mails. The Company may also use the services of its directors, officers, and
employees of the Company's parent U.S. Energy Corp. ("USE") to solicit
Proxies, personally or by telephone and telegraph, but at no additional salary
or compensation. The Board does not intend to use specially engaged employees
or paid solicitors, although it reserves the right to do so.
The Company intends to request banks, brokerage houses and other such
custodians, nominees and fiduciaries to forward copies of the Proxy Materials
to those persons for whom they hold shares and request authority for the
execution of the Proxies. The Company will reimburse the nominee holders for
reasonable out-of-pocket expenses incurred by them in so doing.
VOTING SECURITIES
Only holders of record of shares of the Company's $.001 par value common
stock (the "Common Stock") at the close of business on Thursday, October 3,
1996, will be entitled to vote at the Meeting. On the record date, there were
10,213,094 shares of Common Stock outstanding and entitled to vote. The
Company has no other class of voting securities outstanding. Each share is
entitled to one vote on all matters. A majority of the issued and outstanding
shares of Common Stock, represented in person or by Proxy, constitutes a
quorum at any shareholders' meeting.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following is a list of all record holders who, as of October 3, 1996
beneficially owned more than five percent of the outstanding shares of Common
Stock, as reported in filings with the Securities and Exchange Commission
("SEC"), or as otherwise known to the Company. Except as otherwise noted,
each holder exercises the sole voting and dispositive powers over the shares
listed opposite the holder's name. It should be noted that voting and
dispositive powers over certain shares are shared by two or more of the listed
holders. Such securities are reported opposite each holder having a shared
interest therein.
Amount and Nature of Beneficial Ownership
--------------------------------------------------------------------------------------
Total
Name and address Voting Rights Dispositive Rights Beneficial Percent
of beneficial owner Sole Shared Sole Shared Ownership of Class(1)
- - ------------------- ---- ------ ---- ------ ---------- -----------
U.S. Energy Corp.(2) 5,300,297 -0- 5,300,297 -0- 5,300,297 51.9%
877 North 8th West
Riverton, WY 82501
John L. Larsen(3) -0- 5,826,182 -0- 5,826,182 5,826,182 57.1%
201 Hill Street
Riverton, WY 82501
Max T. Evans(4) 139,236 5,510,297 139,236 5,522,297 5,706,533 55.9%
1410 Smith Road
Riverton, WY 82501
Harold F. Herron(5) 6,932 5,568,067 6,932 5,568,067 5,574,999 54.6%
3425 Riverside Road
Riverton, WY 82501
Daniel P. Svilar(6) 215,000 5,760,297 215,000 5,817,297 6,032,297 59.1%
580 S. Indiana Street
Hudson, WY 82515
R. Scott Lorimer(7) 12,000 5,818,067 12,000 5,818,067 5,839,067 57.8%
11 Korrell Court
Riverton, WY 82501
Don C. Anderson(8) -0- 5,300,297 -0- 5,300,297 5,300,297 51.9%
Unit 247
875 Rio Virgin Drive
St. George, UT 84770
Nick Bebout(8) -0- 5,300,297 -0- 5,300,297 5,300,297 51.9%
P. O. Box 112
Riverton, WY 82501
David W. Brenman(8) -0- 5,300,297 -0- 5,300,297 5,300,297 51.9%
19 West 76th Street
New York, NY 10023
________
(1) Percent of class is computed by dividing the number of shares
beneficially owned plus any options held by the reporting person, by the
number of shares outstanding plus the shares underlying options held by that
person.
(2) Consists of 5,300,297 shares directly held by USE over which sole
voting and dispositive powers are exercised.
(3) Consists of 5,300,297 Crested shares held by USE, 100,000 shares and
150,000 shares underlying options held by SGMC, 60,000 shares and 150,000
shares underlying options held by Plateau, 53,885 shares held by Ruby with
respect to which shared voting and dispositive powers are exercised as a
director with the other directors of those companies and 57,000 forfeitable
shares over which Mr. Larsen exercises shared dispositive powers with the
remaining Crested directors.
(4) Includes 139,236 directly held shares; and 5,300,297 Crested shares
held by USE, and 60,000 shares and 150,000 shares underlying options held by
Plateau, with respect to which shared voting and dispositive powers are
exercised as a director with the other directors of those Companies and 57,000
forfeitable shares over which Mr. Evans exercises shared dispositive powers
with the remaining Crested directors.
(5) Includes 6,932 directly held shares and 3,885 shares held by NWG over
which Mr. Herron exercises sole voting and investment powers. Mr. Herron is
the sole director of NWG. Also includes the Crested shares held by USE and
Ruby, and the shares and shares underlying options held by Plateau, with
respect to which shared voting and dispositive powers are exercised as a USE,
Plateau and Ruby director with the other directors of those companies.
(6) Mr. Svilar exercises shared voting and dispositive over 175,000
directly held shares and 40,000 shares which are held in joint tenancy with a
deceased family member. Also includes 100,000 shares and 150,000 shares
underlying options held by SGMC with respect to which shared voting and
dispositive powers are exercised as a director with the other directors of
SGMC and 57,000 forfeitable shares over which Mr. Svilar exercises shared
dispositive powers with the remaining Crested directors. The listed shares
include 5,300,297 Crested shares held by USE, and 60,000 shares and 150,000
shares underlying options held by Plateau as indirectly beneficially owned
because Mr. Svilar is an executive officer of USE and Plateau. However, Mr.
Svilar is not a director of USE or Plateau and therefore has no voting or
dispositive power with respect to the Crested shares held by those companies.
(7) Mr. Lorimer exercises sole voting powers over 12,000 shares which are
subject to forfeiture. In addition, as a director of SGMC, Mr. Lorimer shares
voting and dispositive powers with the other SGMC directors over 100,000
Crested shares and 150,000 Crested shares underlying options held by SGMC.
The listed shares include shares held by USE, Plateau, Ruby and NWG, and the
Plateau options as indirectly beneficially held by Mr. Lorimer because he is
an executive officer of USE, Plateau, Ruby and NWG. However, because Mr.
Lorimer is not a director of USE, Plateau, Ruby or NWG, he has no voting or
dispositive powers with respect to the Crested shares held by those companies.
(8)Consist of 5,300,297 Crested shares held by USE over which the holder
shares voting and dispositive powers with the other directors of USE.
ELECTION OF DIRECTORS
Directors are currently elected for terms expiring at the next annual
meeting of the shareholders and until their successors are elected and
qualified. In the event the number of directors is increased to six or more,
the Company's Articles provide that the directors are then to be divided into
three groups or classes, and elected to staggered terms of three years
expiring at the third succeeding annual meeting. The directors nominated for
re-election at the 1996 Annual Meeting are as follows:
Other
positions Director
Name Age with the Company since
- - ---- --- ---------------- --------
John L. Larsen 66 Chairman of the Board, 1974
CEO, Vice President
(a)(b)(c)
Max T. Evans 72 President and Chief 1970
Operations Officer (a)(c)
Daniel P. Svilar 67 Secretary(a) 1980
Michael D. Zwickl 49 Assistant Secretary(b) 1984
Kathleen R. Martin 42 (b) 1989
(a) Member of the executive committee.
(b) Member of the audit committee.
(c) Trustee of the USE Employee Stock Ownership Plan (the "ESOP").
Executive officers of the Company are elected by the Board at annual
directors' meetings, which follow each Annual Shareholders' Meeting, to serve
until the officer's successor has been duly elected and qualified, or until
death, resignation or removal by the Board.
Business Experience and Other Directorships of Directors and Nominees.
John L. Larsen has been principally employed as an officer and director
of the Company and USE for more than the past five years. He is a director of
USE's subsidiary, Ruby. USE and Ruby have registered equity securities under
the Securities Exchange Act of 1934 (the "Exchange Act"). Mr. Larsen is chief
executive officer and chairman of the board of directors of Plateau Resources,
Limited and of Sutter Gold Mining Company.
Max T. Evans has been principally employed as an officer and chief
geologist of the Company and USE for more than the past five years. He is a
director of USE. Mr. Evans received B.S. and M.S. degrees in geology from
Brigham Young University.
Daniel P. Svilar has been principally employed as General Counsel of the
Company and USE, Secretary for the Company, and Assistant Secretary of USE for
more than the past five years. Mr. Svilar received a B.S. degree in
mechanical engineering from New Mexico State University in 1952, and a J.D.
degree from the University of Wyoming in 1958.
Michael D. Zwickl has been engaged in the private practice of law at
Casper, Wyoming for more than the past five years. Mr. Zwickl received a
B.S.M.E. degree from the University of Wyoming in 1969. He received a J.D.
degree from the University of Wyoming in 1975 and was admitted to the practice
of law in Wyoming during that year. Mr. Zwickl is director and president of
NUPEC Resources, Inc. which has registered equity securities under the
Exchange Act.
Kathleen R. Martin has been a licensed real estate broker and part owner
of Wind River Realty Co., a real estate brokerage firm in Riverton, Wyoming,
for more than the past five years.
SECURITY OWNERSHIP OF NOMINEES, DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of October 3, 1996, the shares of
Common Stock, and the $.01 par value common stock of the Company's parent,
USE, held by each director and nominee, and by all officers and directors as a
group. Unless otherwise noted, the listed record holder exercises sole voting
and dispositive powers over the shares reported as beneficially owned,
excluding the shares subject to forfeiture and those held in ESOP accounts
established for the employee's benefit. Dispositive powers over the
forfeitable shares is shared by the Company's Board of Directors, while the
ESOP Trustees exercise dispositive powers over all ESOP shares. It should be
noted that voting and dispositive powers for certain shares are shared by two
or more of the listed holders. Such shares are reported opposite each holder
having a shared interest therein, but are only included once in the
shareholdings of the group presented in the table.
Company Common Stock USE Common Stock
------------------------------------------------------------------------
Amount and Percent Amount and Percent
Nature of of Nature of of
Beneficial Ownership Class(1) Beneficial Ownership Class(1)
--------------------- ------- -------------------- --------
John L. Larsen 5,871,182(2) 57.5% 2,045,755(5) 29.1%
Max T. Evans 5,706,533(2) 55.9% 1,403,596(6) 16.2%
Daniel P. Svilar 6,032,297(2) 59.1% 1,237,020(7) 10.7%
Michael D. Zwickl 67,160(3) * 521,803(8) 7.8%
Kathleen R. Martin 65,050(3) * 510,359(9) 7.6%
R. Scott Lorimer 5,830,067(2) 57.1% 1,141,361(10) 16.6%
All officers and
directors as a
group (six persons) 6,247,512(4) 61.2% 2,317,001(11) 32.2%
* Less than one percent
(1) Percent of class is computed by dividing the number of shares
beneficially owned plus any options held by the reporting person or group, by
the number of shares outstanding plus the shares underlying options held by
that person or group.
(2) See the footnotes for this person to the table presented under the
heading "Principal Holders of Voting Securities".
(3) Includes 57,000 shares underlying options over which the holder
exercises shared dispositive power with the remaining directors of Crested.
(4) Includes 384,446 shares over which various members of the group
exercise sole voting powers, 372,446 shares over which they exercise sole
dispositive powers, and 5,814,182 shares over which various members of the
group exercise shared voting powers, including 300,000 shares underlying
options held by SGMC and Plateau (150,000 shares each) and 5,871,182 shares
over which various members exercise shared dispositive rights including 57,000
shares held by employees which is subject to forfeiture.
(5) Mr. Larsen exercises sole voting powers over 242,036 directly owned
USE shares, 106,000 shares held in joint tenancy with his wife, 20,400 shares
subject to forfeiture, 200,100 shares underlying options and 24,794 shares
held in the U.S. Energy Corp. Employee Stock Ownership Plan ("ESOP") account
established for his benefit. The directly owned shares include 27,500 shares
gifted to his wife, that have remained in Mr. Larsen's name. Shares over
which shared voting rights are exercised consist 155,811 shares held by the ESOP
, which have not been allocated to accounts established for specific
beneficiaries and shares held by corporations of which Mr. Larsen is a
director consisting of 510,359 shares held the Company, 125,556 shares held
directly by Plateau, 75,000 shares underlying options held by Plateau, 100,000
shares held by SGMC, 75,000 shares underlying options held by SGMC, and 12,612
shares held by Ruby Mining Company ("Ruby"). Mr. Larsen shares voting and
dispositive rights over such shares with the other directors of those
corporations. Mr. Larsen shares voting powers over the unallocated ESOP
shares in his capacity as an ESOP Trustee with the other ESOP Trustees.
Shares over which sole dispositive rights are exercised consist of directly
owned shares, joint tenancy shares and options, less the 27,500 shares gifted,
but not transferred, to his wife. Shares for which shared dispositive powers
are held consist of the 403,572 shares held by the ESOP, 195,520 shares
subject to forfeiture, the shares held by Crested, Plateau, SGMC and Ruby, and
the Plateau and SGMC option shares. The shares shown as beneficially owned by
Mr. Larsen do not include 42,350 shares owned directly by his wife, who
exercises the sole investment and voting powers over those shares.
(6) USE shares over which Mr. Evans exercises sole voting powers consist
of 36,389 directly owned shares which are held in joint tenancy with his wife,
12,750 shares subject to forfeiture, 57,200 shares underlying options and
13,798 shares held in the ESOP account established for his benefit. Shares
for which Mr. Evans holds sole dispositive powers are comprised of his
directly held shares and the shares underlying his options. Shares over which
Mr. Evans exercises shared voting rights consist of the shares held by
Crested, Plateau, the unallocated ESOP shares and the Plateau options. He
exercises shared dispositive rights over the shares held by Crested, Plateau,
the ESOP, the shares subject to forfeiture and the Plateau options. Mr. Evans
shares voting and dispositive power over the shares held by Crested and
Plateau with the remaining directors of those companies.
(7) Mr. Svilar exercises sole voting powers over 29,263 directly owned
USE shares, 7,700 shares held in joint tenancy with his wife, 12,200 shares
held jointly with a deceased family member, 1,000 shares held as custodian for
his minor child under the Wyoming Uniform Transfers to Minors Act (the Minor's
shares), 18,360 shares subject to forfeiture, 66,000 shares underlying options
and 20,655 shares held in the ESOP account established for his benefit. He
holds sole dispositive power over his directly held shares, joint tenancy
shares, Minor's shares and the shares underlying his options. The shares over
which he exercises shared voting and dispositive rights consist of the 510,359
shares held by the Company and the 100,000 shares and 75,000 shares underlying
options held by SGMC. Mr. Svilar exercises shared investment and voting
powers as a director of Crested, Plateau and SGMC with the other directors of
those companies. He also exercises shared voting and investment powers of
18,767 shares held by a nonaffiliated company of which Mr. Svilar is a
partner. The listed shares include 125,556 shares and 75,000 shares
underlying options held by Plateau, because Mr. Svilar is an executive officer
of Plateau. However, Mr. Svilar is not a director of Plateau and therefore
does not share voting or dispositive rights over the USE shares held by
Plateau.
(8) Mr. Zwickl exercises sole voting and dispositive powers over 9,444
directly held USE shares and 53,625 shares held by two (2) limited
partnerships. He is the sole officer and director of the corporate general
partner of those partnerships. As a director of the Company, Mr. Zwickl
exercises shared voting and dispositive powers over the 510,359 USE shares
held by the Company with the other Crested directors.
(9) Consists of the USE shares held by the Company over which Mrs. Martin
shares voting and dispositive powers with the other Company directors. The
listed shares do not include 220 shares held directly by Mrs. Martin's
husband, who exercises sole voting and dispositive powers over those shares.
(10) Mr. Lorimer exercises sole voting powers over 2 directly held USE
shares, 16,031 shares held in the ESOP account established for his benefit,
12,240 shares subject to forfeiture and 29,700 shares underlying options. Mr.
Lorimer exercises sole dispositive powers over his directly held shares and
the shares underlying his options. He shares voting and dispositive powers
over 100,000 shares and 75,000 shares underlying options held by SGMC as a
director of SGMC. The listed shares include 510,359 shares held by the
Company, 125,556 shares and 75,000 shares underlying options held by Plateau,
53,885 shares held by Ruby and 3,885 shares held by NWG as indirectly
beneficially owned because Mr. Lorimer is an executive officer of Crested,
Plateau, Ruby and NWG. However, Mr. Lorimer is not a director of either
Crested, Plateau, Ruby or NWG and therefore does not exercise voting or
dispositive powers over the USE shares held by those companies.
(11) Members of the group exercise sole voting rights with respect to
991,687 shares, including 353,000 shares underlying options. Various group
members exercise sole dispositive powers over 852,659 shares. They exercise
shared voting powers over 1,165,055 shares, and share dispositive rights over
1,516,386 shares, including 150,000 shares underlying options held by SGMC and
Plateau (75,000 shares each).
Each director of the Company beneficially holds 5,000,000 shares of Four
Nines Gold, Inc. ("FNG") stock held by the Company, and 5,000,000 shares held
by USECC Joint Venture ("USECC") over which they exercise shared voting and
dispositive powers as Company directors. Those shares represent 2% of the
outstanding shares of FNG. John L. Larsen beneficially holds 272,500,000
shares of the common stock of FNG, representing 54.4% of its outstanding
shares. Mr. Larsen's FNG shares include 7,500,000 directly-owned shares,
255,000,000 shares held by USE, 5,000,000 shares held by the Company and the
5,000,000 shares held by USECC, over which he shares voting and dispositive
powers with the remaining directors of USE and the Company, respectively.
Daniel P. Svilar beneficially owns 14,000,000 shares of the common stock of
FNG, representing 2.8% of that class. Mr. Svilar's FNG holdings include
4,000,000 shares held directly in joint tenancy with other family members, the
5,000,000 shares held by the Company and the 5,000,000 shares held by USECC.
Harold F. Herron holds 265,000,000 shares of the common stock of FNG,
representing 52.9%, respectively, of those classes. Mr. Herron's FNG shares
include 5,000,000 directly-owned shares, the shares held by USE and USECC.
Mr. Evans' wife holds 3,000,000 shares of the common stock of FNG, providing
him with beneficial ownership of 268,000,000 shares of FNG's common stock, or
53.5% of the shares of that class. He exercises shared voting and dispositive
rights over the FNG shares held by the Company, USE and USECC, in his capacity
as director of the Company and USE. None of the other directors or officers
of the Company beneficially hold any other shares of stock of FNG. All
executive officers and directors of the Company as a group (six persons)
beneficially hold 284,500,000 shares of the stock of FNG, representing 56.8%
of the outstanding shares of that company.
The Company has conducted a review of Forms 3, 4 and 5 (as amended) and
certain written representations of persons filing reports with the SEC under
Section 16(a) of the Exchange Act. Based solely upon a review of those
reports and written representations, Messrs. Larsen, Evans, Svilar and Lorimer
each had one late filing. The Company believes no other director, executive
officer, beneficial owner of more than ten percent of the Common Stock or
other person who was otherwise subject to Section 16, failed to file such
reports on a timely basis for the year ended May 31, 1996.
Information Concerning Executive Officers Who Are Not Directors
The following information is provided pursuant to Item 401 of Reg. S-B,
regarding the only executive officer of the Company who is not also a
director.
Robert Scott Lorimer, age 45, has been Controller and Chief Accounting
Officer for USE and Crested for more than the past five years. Mr. Lorimer
also has been Chief Financial Officer for both companies since May 25, 1991,
and their Treasurer since December 14, 1990. He serves at the will of the
Boards of Directors. There are no understandings between Mr. Lorimer and any
other person, pursuant to which he was named an officer, and he has no family
relationship with any of the other executive officers or directors of USE or
Crested. During the past five years, he has not been involved in any Reg. S-B
Item 401(d) listed proceeding.
EXECUTIVE COMPENSATION
The Company and USE, under a Management Agreement dated August 1, 1981,
share certain expenses for the general and administrative costs of the
companies. The shared expenses include the compensation of the officers and
directors of the Company and USE (excluding directors' fees). These
compensation costs have been paid through the USECC Joint Venture ("USECC").
It is estimated that substantially all of the work efforts of officers and
directors of the Company and USE are devoted to the business of both the
Company and USE. One half of the expense associated with stock grants under
the USE 1996 Stock Award Program will be paid by Crested. See below.
All USECC personnel are employees of USE in order to utilize USE's ESOP
as an employee benefit mechanism. USE charges USECC for the direct and
indirect costs of its employees for time spent on USECC matters, and USECC
charges one-half of that amount to each of the Company and USE.
The following table sets forth the compensation paid to the Company's
Chief Executive Officer, and those of its most highly compensated executive
officers who were paid more than $100,000 cash in any of the three fiscal
years ended May 31, 1996. The table includes compensation paid such persons
by USE, the Company and Brunton for such persons' services to such
subsidiaries.
SUMMARY COMPENSATION TABLE
Long Term Compensation
------------------------------------
Annual Compensation Awards Payouts
------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other
Name Annual Restricted All Other
and Compen- Stock LTIP Compen-
Principal sation Award(s) Options/ Payouts sation
Position Year Salary($) Bonus($) ($) ($) SARs(#) ($) ($)(3)
- - -------------------------------------------------------------------------------------------------------------------
John L. Larsen 1996 $148,600 -0- -- -- -0- -- $15,566
CEO, Vice 1995 144,023 2,751 -- 9,000(1) -0- -- 13,361
President 1994 148,239 7,028 -- 9,600(1) -0- -- 14,394
USE CEO and
President
Daniel P. Svilar 1996 124,153 -0- -- -- -0- -- 14,009
Asst. Secretary 1995 112,615 2,076 -- 8,100(1) -0- -- 11,008
1994 112,753 64,984 -- 8,640(1) -0- -- 17,300
Harold F. Herron 1996 113,600 -0- -- -- -0- -- 4,037
USE Vice 1995 117,238 2,033 -- -- -0- -- 6,626
President 1994 105,983 18,268 -- -- -0- -- 9,743
R. Scott Lorimer 1996 110,100 -0- -- -- -0- -- 13,749
Treasurer 1995 112,403 2,098 -- 5,681(1) -0- -- 10,989
1994 92,799 43,461 -- 6,181(1) -0- -- 13,260
(1) Bonus shares equal to 20% of original bonus shares issued FY 1990,
multiplied by $3.75 in 1995 and $4.00 in 1994, the closing bid price on issue
dates. These shares are subject to forfeiture on termination of employment,
except for retirement, death or disability. Does not include additional
shares which may be granted if the USE 1996 Stock Award Program is approved at
the USE 1996 Annual Meeting.
(2) Dollar values for contributions to the USE ESOP and 401K matching
contributions.
Executive Compensation Plans and Employment Agreements
To provide incentive to Mr. Larsen for his efforts in having the Green
Mountain Mining Venture ("GMMV") develop a producing mine as soon as possible,
in fiscal 1993 the USE Board adopted a long-term incentive arrangement under
which Mr. Larsen is to be paid a non-recurring $1,000,000 cash bonus by USE,
provided that the Nuexco Exchange Value of uranium oxide concentrates has been
maintained at $25.00 per pound for six consecutive months, and provided
further that USE has received cumulative cash distributions of at least
$10,000,000 from GMMV as a producing property. It is not expected that this
cash bonus will become payable in fiscal 1996.
USE has adopted a plan to pay the estates of Messrs. Larsen, Evans and
Svilar amounts equivalent to the salaries they are receiving at the time of
their death, for a period of one year after death, and reduced amounts for up
to five years thereafter. The amounts to be paid in such subsequent years
have not yet been established, but would be established by the Boards of USE
and the Company.
Mr. Svilar has an employment agreement with USE and the Company, which
provides for an annual salary in excess of $100,000, with the condition that
Mr. Svilar pay an unspecified amount of expenses incurred by him on behalf of
USE and its affiliates. In the event Mr. Svilar's employment is involuntarily
terminated, he is to receive an amount equal to the salary he was being paid
at termination, for a two year period. If he should voluntarily terminate his
employment, the Company and USE will pay him that salary for nine months
thereafter. The foregoing is in addition to Mr. Svilar's Executive Severance
and Non-Compete Agreement with USE (see below).
In fiscal 1992, USE signed Executive Severance and Non-Compete Agreements
with Messrs. Larsen, Evans, Svilar and Lorimer, providing for USE's payment to
such person upon termination of his employment with USE, occurring within
three years after a change in control of USE, of an amount equal to (i)
severance pay in an amount equal to three times the average annual
compensation over the prior five taxable years ending before change in
control, (ii) legal fees and expenses incurred by such persons as a result of
termination, and (iii) the difference between market value of securities
issuable on exercise of vested options to purchase securities in USE, and the
options' exercise price. These Agreements also provide that for the three
years following termination, the terminated individual will not compete with
USE in most of the western United States in regards to exploration and
development activities for uranium, molybdenum, silver or gold. For such
non-compete covenant, such person will be paid monthly over a three year
period an agreed amount for the value of such covenants (depending on the
individual, ranging from $66,667 up to $86,667 annually). These Agreements
are intended to benefit the USE shareholders by enabling such persons to
negotiate with a hostile takeover offeror and assist the Board concerning the
fairness of a takeover, without the distraction of possible tenure insecurity
following a change in control. As of this Proxy Statement date, the Company
is unaware of any proposed hostile takeover.
The Company and USE provide all of their employees with certain insurance
coverage, including life and health insurance. The health insurance plan does
not discriminate in favor of employees who are executive officers of the
Company. Life insurance of $50,000 is provided to each member of upper
management (which includes all persons in the compensation table), $25,000 of
such coverage is provided to middle-management employees, and $15,000 of
coverage is provided to other employees.
Employee Stock Ownership Plan. An ESOP has been adopted to encourage
ownership of USE's common stock among its eligible employees, and to provide
retirement income to them. Because the eligible employees of the Company also
are employees of USE, they benefit from the ESOP and other USE compensation
plans, as described below. The ESOP is a combination stock bonus plan and
money purchase pension plan. It is expected that the ESOP will continue to
invest primarily in USE common stock. Messrs. Larsen, Evans and Herron are
trustees of the ESOP.
USE's contributions to the stock bonus plan portion of the ESOP are
discretionary and are limited to a maximum of 15% of covered employees'
compensation for each year ending May 31. Contributions to the money purchase
portion of the ESOP are mandatory and fixed at ten percent of the compensation
of covered employees for each such year. The contributions required under the
money purchase pension plan are not dependent upon profits or accumulated
earnings of USE, and may be made in cash or shares of USE common stock.
USE made a contribution of 10,089 shares to the ESOP for fiscal 1996, of
which 8,075 shares were contributed under the money purchase pension plan and
2,014 were contributed under the ESOP stock bonus plan. At the time the
shares were contributed, the market price was approximately $20.87 per share,
for a total contribution with a market value of $210,575.34 (which has been
funded by USE), however, the historical basis cost of $8.65 per share was used
for fiscal 1996 financial presentation purposes. The Company and USE are each
responsible for one-half of that amount (ie., $105,287.67) and the Company
currently owes its one-half to USE. The funding was effected by the transfer
by the ESOP of 10,089 USE shares out of the 165,900 USE shares securing loans
made to the ESOP in 1991 and 1992. See below.
Employees are eligible to participate in the ESOP on the first day of the
plan year (June 1) following completion of one year of service in which at
least 1,000 hours are credited. Each employee's participation in the ESOP
continues until the ESOP's anniversary date coinciding with or next following
termination of service by reason of retirement, disability or death. In these
cases, the participant will share in the allocation of USE's contributions for
the ESOP year in which the retirement, death, or disability occurs, and will
have a fully-vested interest in allocations to the participant's account.
An employee's participation in the ESOP does not cease upon termination
of employment. If the employment of a participant in the ESOP is terminated
for reasons other than disability, death, or retirement (unless the employee
receives a lump sum distribution upon the termination of employment),
participation continues following the termination, until five consecutive
one-year breaks in service have been incurred. An employee is deemed to have
a one-year break in service during any year in which 500 or fewer hours of
service are completed.
Employee interests in the ESOP are earned pursuant to a seven year
vesting schedule. Upon completion of three years of service for USE, the
employee is vested as to 20% of the employee's account in the ESOP, and
thereafter at the rate of 20% per year. Any portion of an employee's ESOP
account which is not vested is forfeited upon termination of employment for
any reason, other than retirement, disability, or death.
The 10,089 shares issued to the ESOP for fiscal 1996 included 746 shares
allocated to John L. Larsen's account, 466 shares allocated to Max T. Evans'
account, 194 shares allocated to Harold F. Herron's account, 671 shares
allocated to Daniel P. Svilar's account, and 658 shares allocated to R. Scott
Lorimer's account, for a total of 2,735 shares allocated to accounts for all
executive officers as a group (five persons). Shares forfeited by terminated
employees who were not fully vested were reallocated to plan participants and
included 152, 94, 39, 136 and 134 shares to the accounts of Messrs. Larsen,
Evans, Herron, Svilar and Lorimer, respectively. The accounts of the
executive officers are fully vested, as they have all been employed by the
Company and USECC for more than the past seven years. Allocations of shares
for fiscal 1997 have not been made with respect to any participant in the
ESOP.
The maximum loan outstanding during fiscal 1996 under a loan arrangement
between USE and the ESOP, was $1,014,300 at May 31, 1996 for loans made in
fiscal 1992 and 1991. Interest owed by the ESOP was not booked by USE. The
Company pays one-half of the amounts contributed to the ESOP by USE. Because
the loans are expected to be repaid by contributions to the ESOP, the Company
may be considered to indirectly owe one-half of the loan amounts to USE. The
loan was reduced by $183,785 plus interest of $168,574.84 through the
contribution of shares by the ESOP to the ESOP in 1996.
Stock Option Plan. USE has a combined incentive stock
option/non-qualified stock option plan, reserving an aggregate of 550,000
shares of USE common stock for issuance upon exercise of options granted
thereunder. Awards under the plan are made by a committee of two or more
persons selected by the Board of USE (presently Messrs. Herron, Bebout and
Brenman). The committee establishes the exercise periods and prices for
options granted under the plan. The USE Board ultimately ratifies the actions
of the committee. Total grants to officers and directors as a group may not
exceed 275,000 shares.
Options expire no later than ten years from the date of grant, and upon
termination of employment, except in case of death, disability or retirement.
Subject to the ten year maximum period, upon the death, retirement or
permanent and total disability of an optionee, options are exercisable for
either three months (in case of retirement or disability) or one year (in case
of death) after such event. In fiscal 1994, conditions relating to periods of
USE service before vesting of stock purchased on exercise of the non-qualified
options were removed.
For fiscal 1996, non-qualified options to purchase 360,000 shares of
Common Stock were granted to USE employees (none were granted to officers or
directors). The nonqualified options were issued at an exercise price of
$4.00 per share (the closing bid price on grant date in December 1996). All
731,200 options currently outstanding (including the 360,000 granted in 1996)
will become qualified options if the proposed amendment to the ISOP is
approved by the USE shareholders at the 1996 Annual Meeting of the
Shareholders of USE.
The following table shows unexercised options, how much thereof were
exercisable, and the dollar values for in-the-money options, at fiscal 1995
year end.
Aggregated Option/SAR Exercises in Last Fiscal year and FY-End Option/SAR Values
(a) (b) (c) (d) (e)
Value of
Number of Unexercised
Unexercised In-the-Money
Shares Options/SARs at Options/SARs at
Acquired Value FY-End (#) FY-End($)
on Exercise Realized Exercisable/ Exercisable
Name (#) ($) Unexercisable Unexercisable
- - -------------------------------------------------------------------------------------------
John L. Larsen, -0- -0- 100,000 $1,875,000(1)
CEO, President exercisable exercisable and
unexercised
100,100 $1,786,785(2)
exercisable exercisable and
unexercised
Max T. Evans, -0- -0- 57,200 $1,021,020(2)
Secretary exercisable exercisable and
unexercised
Harold F. Herron, -0- -0- 11,000 $196,350(2)
Vice President exercisable exercisable and
unexercised
Daniel P. Svilar -0- -0- 66,000 $1,178,100(2)
Assistant Secretary exercisable exercisable and
unexercised
R. Scott Lorimer -0- -0- 29,700 $530,145(2)
Treasurer exercisable exercisable and
unexercised
(1)Equal to $20.75 closing bid on last trading day in FY 1996, less $2.00 per
share option exercise price, multiplied by all shares exercisable.
(2)Equal to $20.75 closing bid on last trading day in FY 1996, less $2.90 per
share option exercise price, multiplied by all shares exercisable.
Restricted Stock Plans. The Company and USE have issued stock bonuses to
various executive officers and directors of the Company and others. These
shares are subject to forfeiture to the issuer by the grantee if employment
terminates otherwise than for death, retirement or disability. If the
required service is completed, the risk of forfeiture lapses and the shares
become the unrestricted property of the holder. Messrs. Larsen, Evans,
Svilar, Lorimer and all executive officers who are participants of this
restricted stock plan, as a group (four persons), received 20,400, 12,750,
18,360, 12,240 and 63,750 shares of Common Stock, respectively, through fiscal
1995. The 1996 bonus was deferred until 1997. Additional bonuses of 20% of
the original shares (7,500) will be issued annually through fiscal 1997. The
expenses relating to these stock issuances are shared equally by the Company
and USE.
In addition, in fiscal 1991 the Company issued 7,500 shares of Crested
common stock to Mr. Lorimer, as a bonus for services. Additional annual
bonuses of 20% of such original shares will be issued through fiscal 1997
subject to the same forfeiture conditions as the USE bonus shares. Mr.
Lorimer has received an additional 4,500 Crested shares under this plan
through fiscal 1995. The 1996 bonus was deferred until 1997.
1996 Stock Award Program. In May 1996, the Board of Directors of USE
approved an annual incentive compensation arrangement (the "1996 Stock Award
Program" or "Program") for the Chief Executive Officer and the next four most
senior officers of USE, to be payable in shares of USE's common stock.
Pursuant to the 1996 Stock Award Program, if approved by the USE shareholders
at the 1996 Annual Meeting, shares will be issued annually, provided that each
officer to whom the shares are to be issued is employed by USE as of the issue
date of the grant year, and provided further that USE has been profitable in
the preceding fiscal year. Under the program, the officers of USE will
receive up to an aggregate total of 67,000 shares per year for the years 1997
through 2002, although if in prior years, starting with 1997, fewer than
67,000 USE shares are awarded in any one or more years, the unissued balance
of the 67,000 share maximum will be available for issue in subsequent years.
One-half of the compensation under the Program is the responsibility of
Crested. The Board of Directors of USE will determine the date each year
(starting in 1997) when shares are to be issued to the officers.
The number of shares to be awarded each year out of such 67,000 shares
aggregate limit will be determined by the Compensation Committee of the USE
Board of Directors, and will be based on the USE's earnings per share of
Common Stock for the prior fiscal year. Other factors bearing on the prior
year's profitability may be taken into consideration by the USE Compensation
Committee. In addition, the actual issuance of the number of shares
recommended by the Compensation Committee to be awarded to the officers will
be submitted for approval by the USE shareholders at the USE Annual Meeting
held subsequent to the end of the fiscal year.
For the fiscal year ended May 31 1996, USE earned net income after income
taxes of $270,700 from the sale of Brunton. In addition to the $4.3 million
realized from the sale of Brunton in fiscal 1996 (which amount includes a
three year $1 million promissory note), USE in the future will receive from
the purchaser amounts equal to 45% of the net profits before taxes derived
from Brunton's sales of 1996 products and other new products being developed
by Brunton as of the Brunton sale date, for a period of four years and three
months commencing February 1, 1996. The first such net profits payment would
be made on or before July 15, 1997 for the period from February 1, 1996
through April 30, 1997, if net profits are earned for such period.
The USE Compensation Committee has determined that, taking into account
the foregoing favorable terms upon which Brunton was sold as negotiated by the
five officers of USE, that the Program award for fiscal 1996 should be 14,158
shares of USE common stock, as follows: John L. Larsen (3,846 shares), Harold
F. Herron (959 shares), R. Scott Lorimer (3,485 shares), Daniel P. Svilar
(3,462 shares), and Max T. Evans (2,404 shares). If the 1996 Stock Award
Program is approved by the shareholders at the USE 1996 Annual Meeting, such
shares will be issued to the officers in 1997, provided such persons then are
employed by USE on the issue date in 1997 as determined by the USE Board of
Directors.
Directors' Fees and Other Directors' Compensation
The Company pays non-employee directors a fee of $150 per meeting
attended. All directors are reimbursed for expenses incurred with attending
meetings.
The Company does not have any other arrangements pursuant to which any
director of the Company was compensated during the year ended May 31, 1996.
In fiscal 1992, USE adopted its 1992 Stock Compensation Plan for Non-Employee
Directors, however, the non-employee directors of the Company do not
participate in this USE plan.
COMMITTEES AND MEETING ATTENDANCE
During the fiscal year ended May 31, 1996, there were five meetings of
the Board and one Executive Committee meeting. Each member of the Board
attended at least 75% of the aggregate meetings of the Board and the
committees on which that director serves. From time to time, the Board and
the Executive Committee act by unanimous written consent pursuant to Colorado
law. Such actions are counted as meetings for purposes of disclosure under
this paragraph.
The Board has established an Executive Committee consisting of Messrs.
Larsen, Evans and Svilar. The purpose of the Executive Committee is to act in
place of the Board between meetings of the Board. Under Colorado law and the
Company's Articles of Incorporation, the Executive Committee has the power to
take action on most matters, but cannot approve a plan of merger, sale of
assets otherwise than in the ordinary course of business, or approve or
recommend proposals requiring shareholder approval, or declare dividends or
distributions, fill vacancies to the Board, amend the Bylaws, authorize the
issuance of shares or take certain other actions. The Executive Committee had
one formal meeting in fiscal 1996. The Executive Committee meets informally
on an as-needed basis, but records of the meetings are not always kept.
An Audit Committee has also been established by the Board. The Audit
Committee had one formal meeting and have met informally at various times
during the year ended May 31, 1996. The Audit Committee reviews the Company's
financial statements and accounting controls, and contacts the independent
public accountants as necessary to ensure that adequate accounting controls
are in place and that proper records are being kept. The Audit Committee
also reviews the audit fees of the independent public accountants.
A Management Cost Apportionment Committee was established by USE and the
Company in 1982, for the purpose of reviewing the apportionment of costs
between USE and the Company. John L Larsen, Scott Lorimer and Max Evans are
members of this Committee. The Committee had no meetings during fiscal 1996.
The Board did not appoint nominating or compensation committees during
fiscal year ended May 31, 1996.
CERTAIN OTHER TRANSACTIONS
Transactions with Sheep Mountain Partners ("SMP"). In fiscal 1989, the
Company and USE through USECC sold a one-half interest in the Sheep Mountain
properties to Cycle Resource Investment Corporation ("CRIC"), a wholly-owned
subsidiary of Nukem, Inc., and thereafter USECC and CRIC contributed their 50%
interests in the properties to a new Colorado partnership, SMP, which was
organized to further develop and mine the uranium claims, market uranium and
acquire additional uranium sales contracts. Due to disputes (in arbitration
proceedings at Proxy Statement date) with CRIC and Nukem, necessary mine
maintenance has been funded by USECC alone without reimbursement from SMP
since June 1991. For fiscal 1996, the Company and USE spent an additional
$832,400 on SMP property maintenance, none of which has been reimbursed by
SMP. At May 31, 1995, accumulated SMP property maintenance costs and fees
owed the Company and USE were $5,354,000.
Transactions with Plateau Resources Limited. In August 1993, USE entered
into an agreement to acquire all the issued and outstanding common stock of
Plateau Resources Limited ("Plateau"), a Utah corporation. Plateau owns a
uranium processing mill and support facilities and certain other real estate
assets in southeastern Utah. Plateau has applied to renew its source
materials license with the United States Nuclear Regulatory Commission
("NRC"). USE paid nominal cash consideration for the Plateau stock and agreed
to assume all environmental liabilities and reclamation bonding obligations.
Prior to closing the agreement, Plateau transferred $2,500,000 cash to fund
the NRC Surety Trust Agreement to pay future costs of mill decommissioning,
site reclamation and long-term site surveillance. Plateau also transferred
$4,800,000 cash to an Agency Agreement to indemnify the seller against
possible environmental or nuclear claims. At the date of acquisition Plateau
held an additional $6.9 million of unencumbered cash to be used for care and
maintenance costs on the mill and other assets acquired. Most of the
unencumbered cash has been used for care and maintenance costs and loaned to
USE for development of certain properties held by USE and the Company.
Although the Company has no ownership in Plateau, directors of the Company and
USE have agreed to divide equally one-half of the obligations incurred in
excess of the total $14.2 million described above and will share in one-half
of all cash flows derived from operations of these assets.
Plateau also owns all of the outstanding stock of Canyon Homesteads, Inc.
("Canyon"), a Utah corporation, which developed the Ticaboo, Utah townsite 3.5
miles south of the mill. The Ticaboo site includes a 66 room motel, general
store, laundromat facility, 98 single family home sites, 151 mobile home
sites, and 26 recreational vehicle sites (all with utility access). The
townsite is located on a State of Utah lease near Lake Powell, and is being
operated as a commercial enterprise. USE and the Company plan to further
develop the townsite, and have been seeking financial partners.
Transactions with Arrowstar Investments Inc. In April 1995, Canyon
Homesteads, Inc. ("Canyon") entered into an agreement with First-N-Last LLC
("FNL", a Utah limited liability company), to develop and operate certain
assets in Utah near the Ticaboo, Utah townsite located 3.5 miles south of the
Shootaring Uranium Mill owned by Plateau Resources, Limited. Under the
agreement, Canyon contributed to FNL an operating service station and boat
storage operation, and Arrowstar Investments, Inc. ("Arrowstar", the other
member of FNL) will contribute up to $150,000 cash. Arrowstar will contribute
up to another $50,000 as needed. The purpose of FNL is to remodel the
contributed assets, build a convenience store and gift shop, and operate the
upgraded facility. Profits are allocated 90 percent to Arrowstar until
recovery of its cash investment, then 75 percent to Arrowstar until it has
received $215,000 cash (including investment), and 50 percent to FNL and 50
percent to Canyon thereafter. Arrowstar is not expected to become profitable
until 1997. Although FNL is not an arms-length transaction, Plateau (and USE,
as its sole shareholder) approved the arrangement because neither Plateau nor
USE had (nor could they acquire on favorable terms) the funds required to
upgrade the facility. Arrowstar has advised it intends to borrow the money
required to fund its FNL obligations from a commercial bank, with the personal
guarantees of the Arrowstar shareholders, as may be required by the bank.
Arrowstar is a private corporation: the three sons of John L. Larsen (who are
not affiliates of the Company or Crested) are directors and shareholders of
Arrowstar. John L. Larsen owns no interest in Arrowstar. In 1996 Arrowstar
assigned its interest in FNL to USECC, see below.
In June 1995, USECC signed a six year option to acquire from Arrowstar a
7,200 square foot hangar at the Riverton Regional Airport. The option
purchase price originally was agreed to be $110,000; subsequently, Arrowstar
and USE agreed the purchase price would equal an independent market value
appraisal. USE has paid $40,000 against the purchase price, and expects to
pay the balance when an appraisal is completed. Arrowstar acquired the
property for cash from the prior owner in 1992, at which time neither the
Company or Crested had any interest in acquiring the property. USECC expects
to use the facility in connection with expanded municipal airport traffic in
the coming years and in the interim for airplane and vehicle storage purposes.
On April 26, 1996 USECC sold its Wind River Estates Mobile Home Park
(including various personal property) in Riverton, Wyoming to Arrowstar for
$804,000, the appraised value. The total purchase price consists of $500,000
cash; Arrowstar's unsecured 10% promissory note due 2006 for $56,000;
cancellation of the promissory note USECC gave Arrowstar in connection with
the purchase of the hangar described above, which note was valued at $47,934
including accrued interest; and $161,378.34 by Arrowstar assigning to USECC
its entire interest in Firs-N-Last L.L.C. with respect to the Ticaboo assets
described above. Additionally, USECC credited Arrowstar $38,687 against the
purchase price for the Wind River Estates mobile home park for good will due
to Arrowstar's investing in First-N-Last at a time when neither Plateau nor
USE or Crested had the funds required to upgrade the facility. Subsequently,
USECC assigned the 50% interest in FNL (which it had acquired from Arrowstar)
to Plateau Resources, Limited, which reduced USE's payable to Plateau.
Transactions with Directors. Three of the USE directors, Messrs. Larsen,
Evans and Herron, are trustees of the ESOP. Messrs. Larsen and Evans are also
directors of the Company. In their capacity as trustees, they have an
obligation to act in the best interests of the ESOP participants. This duty
may conflict with their obligations as directors of USE and the Company in
times of adverse market conditions for the common stock of USE and the
Company, or in the event of a tender offer or other significant transaction.
In general, the ESOP trustees exercise dispositive powers over shares
held by the ESOP, and exercise voting powers with respect to ESOP shares that
have not been allocated to a participant's account. In addition, the
Department of Labor has taken the position that in certain circumstances ESOP
trustees may not rely solely upon voting or dispositive decisions expressed by
plan participants, and must investigate whether those expressions represent
the desires of the participants, and are in their best interests.
Other Information. USE has adopted a stock repurchase plan under which
it may purchase up to 275,000 shares of its Common Stock. These shares would
be purchased in part to provide a source of shares for issuance upon the
exercise of various outstanding options.
Harold F. Herron, son-in-law of John L. Larsen, has been living in and
caring for a house owned by USE until such time as the property was sold. In
fiscal 1995, Mr. Herron purchased the house for $260,000, the appraised value
of the property, and was reimbursed by the Company for leasehold improvements
totaling $22,800. USE accepted a promissory note in the amount of $112,170
with interest compounded annually at 7% due on September 6, 1999 as a result
of this transaction. This note is secured by 30,000 shares of USE common
stock owned by Mr. Herron.
Three of John L. Larsen's sons and a son-in-law are employed by USE (as
manager of USECC's commercial operations, uranium fuels marketing director, as
chief pilot and landman, respectively). Mr. Larsen's son-in-law Harold F.
Herron is an officer and director of USE, and president and a director of
Brunton. Collectively, the five individuals received $288,600 in cash
compensation (paid by USE, Crested and Brunton) for those services during the
fiscal year ended May 31, 1996, which amount includes $81,250 cash
compensation paid Mr. Herron (principally in his capacity as president of
Brunton, and also for his service as a USE vice president, see Executive
Compensation above). The foregoing compensation expense (excluding
compensation paid by Brunton to Mr. Herron, and one of Mr. Larsen's sons as a
Brunton officer) was shared by the Company and USE, in accordance with the
compensation arrangements for all employees. Mr. Herron continues as
president and a director of Brunton; one of Mr. Larsen's sons, who had served
as a Brunton officer resigned as an officer of Brunton upon its sale in fiscal
1996.
The Company and USE provide management and administrative services for
affiliates under the terms of various management agreements. Revenues from
these services for the Company were $116,500 in fiscal 1996 and $99,200 in
fiscal 1995.
CERTAIN INDEBTEDNESS
Transactions Involving USECC. The Company and USE conduct the bulk of
their activities through their equally-owned joint venture, USECC. From time
to time the Company and USE advance funds to or make payments on behalf of
USECC in furtherance of their joint activities. These advances and payments
create intercompany debt between the Company and USE. The party extending
funds is subsequently reimbursed by the other venturer. USE had a note
receivable of $6,199,700 from the Company at May 31, 1996 ($4,163,315 during
fiscal 1995).
Debt Associated with USE's ESOP. During the year ended May 31, 1996, USE
made a contribution of 10,089 shares of USE common stock to the ESOP. Because
the Company engages USE's employees to discharge substantially all of its
functions, these contributions benefitted the Company. As a result, the
Company owes USE $43,650 for one-half of the USE's contribution to the ESOP.
Regular and substantial contributions by USE to the ESOP are required to
maintain the ESOP in effect. In fiscal 1995, USE contributed 37,204 shares of
USE common stock to the ESOP, for one-half of which the Company owes USE
$99,983.
Loans to Three Directors. As of May 31, 1996 three directors owed USE
$400,222 as follows (each loan is secured with shares of common stock of USE
owned by the individual): Harold F. Herron $10,995 (1,000 shares); John L.
Larsen $355,348 (124,000 shares), and Max T. Evans $33,889 (7,500 shares).
The outstanding loan amounts represent various loans made to the individuals
over a period of several years. The loans mature December 31, 1997 and bear
interest at 10% per year. For information on an additional loan to Mr.
Herron, see below. At May 31, 1996, John L. Larsen and members of his
immediate family were indebted to USE for $673,000 (of which $650,400 is
represented by notes secured by 170,500 shares of USE's common stock). At May
31, 1995 the Larsen family indebtedness (including the amount owed by John L.
Larsen) totaled $609,000 secured by 132,500 shares of USE's Common Stock.
Such indebtedness of the Larsen family would be paid by the USE withholding an
equal amount out of the $1 million cash bonus payable to Mr. Larsen when the
GMMV properties have been placed into production and certain related
conditions have been met. See "Executive Compensation Plans and Engagement
Agreements." The preceding amounts do not include the loan to Mr. Herron, see
below.
In fiscal 1995, the USE made a five year non-recourse loan in the amount
of $112,170 to Harold F. Herron. The loan is secured by 30,000 shares of
USE's Common Stock, bears interest at a rate of 7% and is payable at
maturity. The USE board approved the loan to obtain a higher interest rate of
return on the funds compared to commercial rates, and to avoid having the USE
stock prices depressed from Mr. Herron selling his shares to meet personal
obligations. See Transactions with Directors above.
Other Debt. The Company had a non-recourse promissory note receivable of
$72,700 due from a shareholder who is the brother of Nick Bebout, a director
of USE and the nephew of Daniel P. Svilar, a director and executive officer of
the Company. This note was non-interest bearing and was repaid in fiscal 1994
with USE common stock that collateralized the note. At the same time, the
Company also assumed a non-recourse promissory note payable from this
shareholder to USE for $260,600. This note is secured by 60,000 shares of USE
common stock and was due October 30, 1995. The loan maturity has been
extended to October 30, 1998.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Board has selected Arthur Andersen & Co. as independent public
accountant for the year ending May 31, 1997. A representative of Arthur
Andersen & Co. may be present at the Meeting and if present, will be available
to respond to appropriate questions. The representative of Arthur Andersen &
Co., will be provided with an opportunity to make a statement at the Meeting.
ANNUAL REPORT TO SHAREHOLDERS
A copy of the 1996 Annual Report to Shareholders, including financial
statements, has been forwarded to all record shareholders entitled to vote at
the Meeting. If any recipient of this Proxy Statement has not received a copy
of that Annual Report, please notify Daniel P. Svilar, 877 North 8th West,
Riverton, WY 82501, telephone (307) 856-9271, and the Company will send a
copy.
SHAREHOLDERS' PROPOSALS
The next Annual Meeting of Shareholders is expected to be held in
November of 1997. Shareholder proposals to be presented at the next Annual
Meeting of Shareholders must be received in writing by the Company at its
offices in Riverton, Wyoming, addressed to the President, no later than June
9, 1997.
OTHER MATTERS
The Board does not know of any other matters which may properly come
before the Meeting. However, if any other matters properly come before the
Meeting, it is the intention of the appointees named in the enclosed form of
Proxy to vote said Proxy in accordance with their best judgment on such
matters.
Your cooperation in giving these matters your immediate attention, and in
returning your Proxy promptly, will be appreciated.
By Order of the Board of Directors
CRESTED CORP.
s/ Daniel P. Svilar
DANIEL P. SVILAR, Secretary
Dated: November 10, 1996
PROXY CRESTED CORP. PROXY
KNOW ALL MEN BY THESE PRESENTS: That the undersigned shareholder of
Crested Corp. (the "Company") in the amount noted below, hereby constitutes
and appoints Messrs. John L. Larsen and Daniel P. Svilar, or either of them
with full power of substitution, as attorneys and proxies, to appear, attend
and vote all of the shares of stock standing in the name of the undersigned at
the Annual Meeting of the Company's shareholders to be held at the Company's
executive offices, 877 North 8th West, Riverton, Wyoming 82501, on Friday,
December 13, 1996 at 10:00 a.m., local time, or at any adjournments thereof
upon the following:
(INSTRUCTION: Mark only one box as to each item.)
1. Election of Directors:
___ FOR the nominees listed below ___ AGAINST the nominees listed below
___ ABSTAIN
John L. Larsen Max T. Evans Daniel P. Svilar
Michael D. Zwickl Kathleen R. Martin
(To withhold authority to vote for any nominee, draw a line through the
name of that nominee.)
2. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the Meeting.
CRESTED CORP.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. THE SHARES
REPRESENTED HEREBY WILL BE VOTED AS SPECIFIED HEREON WITH RESPECT TO THE ABOVE
PROPOSALS. Where no vote is specified, the proxyholder will cast votes for
the election of management's nominees and, in their discretion on any other
matters that may come before the Meeting.
Sign your name exactly as it appears on the mailing label below. It is
important to return this Proxy properly signed in order to exercise your right
to vote, if you do not attend in person. When signing as an attorney,
executor, administrator, trustee, guardian, corporate officer, etc., indicate
full title as such.
__________________________________
(Sign on this line - joint holders
may sign appropriately)
____________ __________________
(Date) (Number of Shares)
PLEASE NOTE: Please sign, date and
place this Proxy in the enclosed
self-addressed, postage prepaid
envelope and deposit it in the mail
as soon as possible.
Please check if you are planning to
attend the meeting ____
If the address on the mailing label
is not correct, please provide the
correct address in the following
space.
__________________________________
__________________________________