SUPPORT AGREEMENT
SUPPORT AGREEMENT dated as of February 4, 1997 (this
"Support Agreement") among the following parties (collectively,
the "Parties" and individually, a "Party"):
(a) Dakota Mining Corporation, a federal corporation
organized under the Canada Business Corporation Act ("Dakota");
(b) USMX INC., a Delaware corporation ("USMX"); and
(c) Pegasus Gold Inc., a British Columbia corporation
("Shareholder").
RECITALS
WHEREAS, Shareholder is the legal or beneficial owner of
4,826,000 shares (or approximately 29.8%) of the voting common
stock, par value $.001 per share, of USMX ("USMX Shares");
WHEREAS, Dakota and USMX have entered into a letter of
intent dated January 3, 1997 ("Letter of Intent") for the
purposes of entering into, or have entered into, a merger
agreement (the "Merger Agreement"), whereby, pursuant to a
reverse-triangular merger (the "Merger"), Dakota Merger Corp, a
Delaware corporation and wholly-owned subsidiary of Dakota
("Merger Corp"), will merger with and into USMX, with USMX as the
surviving corporation;
WHEREAS, as a result of the Merger, all of the outstanding
USMX Shares will be automatically converted into common shares,
no par value, of Dakota ("Dakota Shares"), which are listed
and/or quoted on the American, Berlin, and Toronto Stock
Exchanges, in the ratio of 1.1 USMX Shares to one Dakota Share;
all of the outstanding capital stock of Merger Corp will be
automatically converted into USMX Shares in the ratio of one
share of Merger Corp to one USMX Share;
WHEREAS, pursuant to the General Corporation Law of the
State of Delaware, the Merger Agreement and the Merger will
require the approval of a majority of the USMX Shares at a duly
called shareholders' meeting, which will be held at the time and
in the manner set forth in the Merger Agreement (the
"Shareholders' Meeting");
WHEREAS, Shareholder deems it in its best interest of
shareholder and USMX that the Merger Agreement and the Merger be
approved by the holders of USMX Shares; and
WHEREAS, Shareholder understands that USMX and Dakota are
relying on the Shareholder's covenants and agreements contained
herein in executing the Merger Agreement, and that USMX and
Dakota will incur substantial expenses in proceeding toward
consummation of the Merger.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual benefits to
be derived and the representations and warranties, conditions and
premises herein contained, and intending to be legally bound
hereby, Dakota, USMX, and Shareholder agree as follows:
1. Affirmative Vote. Shareholder, in its capacity as a holder
of USMX Shares or as a representative with the authority to vote
USMX Shares, shall vote (or appoint proxies who will vote), and
shall use its best efforts to cause all of its affiliates with
authority to vote USMX Shares to vote, all of the USMX Shares
that it owns or they own, or over which it controls or they
control voting power, as of the record date for the Shareholders'
Meeting (a) in favor of the approval, consent, and ratification
of the Merger Agreement and the Merger and (b) against any action
which would impede, interfere, or discourage the Merger or result
in any breach of representation, warranty, covenant, or agreement
of USMX under the Merger Agreement; provided, however,
Shareholder shall have no obligation with respect to voting USMX
Shares if (a) the Board of Directors of USMX recommends that
their respective shareholders vote against that Merger or (b) the
opinion of Coopers & Lybrand L.L.P. delivered pursuant to Section
10.8 of the Merger Agreement, based on the appropriate
representations of Dakota, Merger Corp, and USMX, and provided
that U.S. holders of USMX Shares enter into gain recognition
agreements with the Internal Revenue Service where appropriate,
does not conclude that no gain or loss should be recognized by
the U.S. holders of USMX Shares upon their receipt of Dakota
Shares in exchange for their USMX Shares; and provided further
that this agreement to vote shall immediately terminate on the
earliest to occur of termination of the Letter of Intent (other
than by execution of the Merger Agreement), or termination of the
Merger Agreement, or June 1, 1997.
2. Standstill. Without the prior written consent of Dakota,
which may be withheld in Dakota's sole discretion, Shareholder
shall not, and shall use its best efforts to cause its affiliates
not to, offer to sell, sell, contract to sell, or otherwise
dispose of any USMX Shares or any securities convertible into
USMX Shares from the date hereof until the earliest of (a)
consummation of the Merger, (b) termination of the Letter of
Intent in accordance with its terms, unless the Letter of Intent
is terminated by execution by Dakota and USMX of the Merger
Agreement, or (c) termination of the Merger Agreement in
accordance with its terms. For purposes of the foregoing, the
Merger or Merger Agreement shall in form and substance embody the
terms of the Letter of Intent dated January 3, 1997.
3. Representations and Warranties of Shareholder. Shareholder
is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation.
Shareholder may execute, deliver, and perform this Support
Agreement without the necessity of obtaining any consent,
approval, authorization, or waiver, or giving any notice or
otherwise. Shareholder has the full corporate power and
authority to execute and deliver this Support Agreement and to
perform its obligations hereunder. This Support Agreement has
been duly authorized by the Shareholder. This Support Agreement
has been duly executed and delivered by Shareholder and
constitutes the legal, valid, and binding obligation of
Shareholder, enforceable against Shareholder in accordance with
its terms, except that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought. The execution,
delivery, and performance of this Support Agreement by
Shareholder will not constitute a violation of the Certificates
or Articles of Incorporation (or like charter documents) or By-
laws, each as amended, of Shareholder, or constitute a material
violation of any law applicable or relating to the Shareholder.
4. Injunctive Relief. The Parties acknowledge that the remedy
at law for any breach of the obligations undertaken by
Shareholder may be insufficient and inadequate, and that Dakota
and USMX sole remedy for Shareholder's breach of this Agreement
shall be equitable relief, in addition to remedies at law. In
the event of any action to enforce the provisions of this Support
Agreement, Shareholder waives the defense that there is an
adequate remedy at law. Shareholder acknowledges that the USMX
Shares are unique. In the event Shareholder refuses to perform
its obligations under this Support Agreement, Dakota and USMX
shall have, in addition to any other remedy at law or in equity,
the right to specific performance. In no event shall Shareholder
be liable for monetary damages hereunder.
5. Consideration.
(a) Board Seat. Shareholder, in consideration for this
Agreement, and reflecting its ownership position in USMX, shall
be appointed to fill a seat on the Board of Directors of the
surviving corporation, subject to shareholder approval, and shall
receive the recommendation of the Board of the surviving
corporation to its shareholders to continue to hold that Board
seat as long as the Shareholder holds not less than five percent
of the common stock of the surviving corporation.
(b) Montana Tunnels. Dakota and USMX shall use their best
efforts, subject to applicable law and the fiduciary obligations
of USMX's Board of Directors, to obtain the approval of the
shareholders of USMX with respect to the disposition of USMX's
royalty interest in the Montana Tunnels properties.
6. Miscellaneous.
(a) Entire Agreement. This Support Agreement contains the
entire agreement among the Parties with respect to the subject
matter hereof and, except as expressly provided herein,
supersedes all prior arrangements or understandings with respect
thereto (except for such agreements supplementing or amending
this Support Agreement which specifically make reference to this
Section).
(b) Descriptive Headings. The descriptive headings of this
Support Agreement are for convenience only and shall not control
or affect the meaning or construction of any provision of this
Support Agreement.
(c) Governing Law. This Support Agreement shall be
governed by and construed in accordance with the laws of the
State of Washington (other than the choice of law principles
thereof).
(d) Waivers and Amendments. Any waiver of any term of this
Support Agreement, or any amendment or supplementation of this
Support Agreement, shall be effective only if in writing. A
waiver of any breach or failure to enforce any of the terms or
conditions of this Support Agreement shall not in any way affect,
limit, or waive a Party's rights hereunder at any time to enforce
strict compliance thereafter with every term or condition of this
Support Agreement.
(e) Third-Party Rights. Notwithstanding any other
provision of this Support Agreement to the contrary, this Support
Agreement shall not create benefits on behalf of any third party
or any other person; and this Support Agreement shall be
effective only as between the Parties, their successors and
permitted assigns.
(f) Illegalities. In the event that any provision
contained in this Support Agreement shall be determined to be
invalid, illegal, or unenforceable in any respect for any reason,
the validity, legality, and enforceability of any such provision
in every other respect and the remaining provisions of this
Support Agreement shall not, at the election of the Party for
whose benefit the provision exists, be in any way impaired.
IN WITNESS WHEREOF, the undersigned have executed this Support
Agreement as of the day and year first above written.
USMX, INC. DAKOTA MINING CORPORATION
By:___________________________ BY: __________________________
Name: Name: Alan R. Bell
Title: Title: President and CEO
PEGASUS GOLD INC.
By: ________________________________
Name:
Title: