Annual Report on Form 10-K
for the
Year Ended 12/31/00
-------------------
Exhibit 10.23
Form of Change of Control Agreement
Apex Silver Mines Corporation has entered into change of control agreements with
eight of its officers and subsidiary officers. The agreements provide for
certain benefits upon the executive's termination of employment or the
occurrence of certain other events following a Change of Control as defined in
the agreement, including a lump sum severance benefit equal to a specified
multiple of the executive's salary plus target bonus in effect immediately prior
to the occurrence of the event giving rise to the benefit and continuation of
medical, dental, disability, life insurance and other benefits for a specified
period. The agreements are identical except for the multiple used to calculate
the severance benefit and the period during which benefits continue.
Under these agreements Mr. Hulley would receive a lump sum severance benefit
equal to three times his salary plus target bonus, and would receive
continuation of benefits for three years. Each of Messrs. Lettes, DeGuire,
Smith, Buchanan, LeBlanc, Shaw and Delgado and Ms. Wilson would receive a lump
sum severance benefit equal to two times his or her salary plus target bonus and
would receive continuation of benefits for two years. Mr. Smith, formerly Vice
President of Exploration, is no longer employed by Apex Silver Mines
Corporation, and his change of control agreement is no longer in effect.
[Date]
Name and Title
Apex Silver Mines Corporation
1700 Lincoln Street, Suite 3050
Denver, CO 80203
Dear :
Apex Silver Mines Limited (the "Company") considers it essential to the best
interests of its stockholders to foster the continuous employment of key
management personnel. In this connection, the Board of Directors of the Company
(the "Board") recognizes that, as is the case with many publicly held
corporations, the possibility of a Change of Control (as defined in Section 2
hereof) may exist and that such possibility, and the uncertainty and questions
which it may raise among management, may result in the departure or distraction
of management personnel to the detriment of the Company and its stockholders.
The Board has determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of members of the Company's
management, including yourself, to their assigned duties without distraction in
the face of potentially disturbing circumstances arising from the possibility of
a Change of Control, although no such change is now contemplated.
In order to induce you to remain in the employ of the Company, the Company
agrees that you shall receive the severance benefits set forth in this letter
agreement (the "Agreement") in the event your employment with the Company is
terminated subsequent to a Change of Control under the circumstances described
below.
1. TERM OF AGREEMENT. This Agreement shall commence on the date hereof and
shall continue from year to year at the discretion of the Board of Directors,
provided, however, that if a Change of Control of the Company shall have
occurred prior to June 26, 2000, this Agreement shall continue in effect for a
period of [ ] months beyond the month in which such Change of Control
occurred, at which time this Agreement shall terminate. Notwithstanding the
foregoing,
and provided no Change of Control shall have occurred, this Agreement shall
automatically terminate upon the earlier to occur of (i) your termination of
employment with the Company, or (ii) the Company's furnishing you with notice of
termination of employment, irrespective of the effective date of such
termination.
2. CHANGE OF CONTROL. No benefits shall be payable hereunder unless there
shall have been a Change of Control, as set forth below. For purposes of this
Agreement, a "Change of Control" shall mean the first to occur of the events
specified in (A), (B), or (C), following, (but no event other than the specified
events) except as otherwise provided in (D), following: (A) any
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person becomes the beneficial owner, directly or indirectly of securities of
Apex Silver Mines Limited representing thirty-five percent (35%) or more of the
combined voting power of the Company's then outstanding voting securities other
than any person who, as of the date this policy is approved by the Board of
Directors, is the beneficial owner of at least 15% of the Company's outstanding
voting securities (determined in Accordance with Rule 13d under the Securities
and Exchange Act of 1934) or (B) three or more Directors of the Company, whose
election or nomination for election is not approved by a majority of the
applicable Incumbent Board, are elected within any single twelve month period to
serve on the Board; or (C) members of the applicable Incumbent Board cease to
constitute a majority of the Board. (D) Notwithstanding the foregoing, a Change
of Control shall not be deemed to occur solely because thirty-five percent (35%)
or more of the combined voting power of the Company's then outstanding voting
securities are acquired by one or more employee benefit plans maintained by the
Company. (E) For purposes of Section 2(A), the terms "person" and "beneficial
owner" shall have the meanings set forth in Sections 2.4(a)(9) and 13(d) of the
Securities Exchange Act of 1934, as amended, and in the regulations promulgated
thereunder. For purposes of this Section 2 "Incumbent Board" means (i) members
of the Board of Directors of the Company on January 1, 1998, to the extent that
they continue to serve as members of the Board, and (ii) any individual who
becomes a member of the Board after January 1, 1998, if such individuals
election or nomination for election as a Director was approved by a vote of at
least seventy-five percent (75%) of the then applicable Incumbent Board.
3. TERMINATION FOLLOWING CHANGE OF CONTROL. If the events described in Section
2 hereof constituting a Change of Control shall have occurred, you shall be
entitled to the benefits provided in Subsection 4(iii) hereof upon the
subsequent termination of your employment during the term of this Agreement
unless such termination is (A) because of your death or Disability, (B) by the
Company for Cause, or (C) by you other than for Good Reason.
(i) Disability. If, as a result of your incapacity due to physical or mental
illness, you shall have been absent from the full-time performance of your
duties with the Company for six consecutive months, and within 30 days
after written notice of termination is given you shall not have returned
to the full-time performance of your duties, your employment may be
terminated for "Disability."
(ii) Cause. Termination by the Company of your employment for "Cause" shall
mean termination for (A) the commission of a felony or a crime involving
moral turpitude or the commission of any other act involving dishonesty,
disloyalty, or fraud with respect to the Company, (B) conduct tending to
bring the Company into substantial public disgrace or disrepute, (C)
substantial and repeated failure to perform duties as reasonably directed
by the Board, (D) gross negligence or willful misconduct with respect to
the Company or any of its affiliated entities, or (E) any other material
breach of any other agreement between you and the Company or its
affiliated entities which is not cured within 15 days after written notice
thereof to you.
(iii) Good Reason. You shall be entitled to terminate your employment for Good
Reason. For purposes of this Agreement, "Good Reason" shall mean, without
your express written consent, the occurrence after a Change of Control of
any of the following circumstances unless, in the case of paragraphs (A),
(B), (E), (F), (G) or (H), such circumstances are fully corrected prior to
the Date of Termination specified in the Notice of Termination, as such
terms are defined in Subsections 3(v) and 3(iv) hereof, respectively,
given in respect thereof:
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(A) the assignment to you of any duties inconsistent with your current
status as an executive of the Company or a substantial adverse
alteration in the nature or status of your responsibilities from
those in effect immediately prior to the Change of Control;
(B) a reduction by the Company in your annual base salary as in effect on
the date hereof or as the same may be increased from time to time,
except for across-the-board salary reductions similarly affecting all
senior executives of the Company and all senior executives or any
person in control of the Company;
(C) your relocation to a location not within 25 miles of your present
office or job location, except for required travel on the Company's
business to an extent substantially consistent with your present
business travel obligations;
(D) the failure by the Company, without your consent, to pay to you any
portion of your current compensation, or to pay to you any portion of
an installment of deferred compensation under any deferred
compensation program of the Company, within seven days of the date
such compensation is due;
(E) the failure by the Company to continue in effect any bonus to which
you were entitled, or any compensation plan in which you participated
immediately prior to the Change of Control which is material to your
total compensation, including but not limited to the Company's
Incentive Bonus Plan, Stock Option Plan, 401(k) Profit Sharing Plan,
or any substitute plan or plans adopted prior to the Change of
Control, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such
plan and such equitable arrangement provides substantially equivalent
benefits not materially less favorable to you (both in terms of the
amount of benefits provided and the level of your participation
relative to other participants), or the failure by the Company to
continue your participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable (both in
terms of the amount of benefits provided and the level of your
participation relative to other participants) as existed at the time
of the Change of Control of the Company.
(F) the failure by the Company to continue to provide you with benefits
substantially similar to those enjoyed by you under any of the
Company's life insurance, medical, dental, and accident, or
disability plans in which you were participating at the time of the
Change of Control, the taking of any action by the Company which
would directly or indirectly materially reduce any of such benefits
or deprive you of any material fringe benefit enjoyed by you at the
time of the Change of Control, or the failure by the Company to
provide you with the number of paid vacation days to which you are
entitled in accordance with the Company's normal vacation policy in
effect at the time of the Change of Control;
(G) the failure of the Company to obtain a satisfactory agreement from
any successor to assume and agree to perform this Agreement, as
contemplated in Section 5 hereof; or
(H) any purported termination of your employment which is not effected
pursuant to a Notice of Termination satisfying the requirements of
Subsection 3(iv) hereof (and,
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if applicable, the requirements of Subsection 3(ii) hereof); for
purposes of this Agreement, no such purported termination shall be
effective.
Your rights to terminate your employment pursuant to this Subsection
shall not be affected by your incapacity due to physical or mental
illness. Your continued employment shall not constitute consent to,
or a waiver of rights with respect to, any circumstance constituting
Good Reason hereunder.
(iv) NOTICE OF TERMINATION. Any purported termination of your employment by the
Company or by you shall be communicated by written Notice of Termination
to the other party hereto in accordance with Section 6 hereof. For
purposes of this agreement, a "Notice of Termination" shall mean a notice
which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of your
employment under the provision so indicated.
(v) DATE OF TERMINATION, ETC. "Date of Termination" shall mean (A) if your
employment is terminated for Disability, 30 days after Notice of
Termination is given (provided that you shall not have returned to the
full-time performance of your duties during such 30-day period), and (B)
if your employment is terminated pursuant to Subsections 3(ii) or 3(iii)
hereof or for any other reason (other than Disability), the date specified
in the Notice of Termination (which, in the case of a termination pursuant
to Subsection 3(ii) hereof shall not be less than 30 days, and in the case
of a termination pursuant to Subsection 3(iii) hereof shall not be less
than 15 nor more than 60 days, respectively, from the date such Notice of
termination is given).
4. COMPENSATION UPON TERMINATION OR DURING DISABILITY. Following a change of
Control, as defined by Section 2 hereof, upon termination of your employment or
during a period of Disability you shall be entitled to the following benefits:
(i) During any period that you fail to perform your full-time duties with the
Company as a result of incapacity due to physical or mental illness, you
shall continue to receive your base salary at the rate in effect at the
commencement of any such period, together with all amounts payable to you
under any compensation plan of the Company during such period, until this
Agreement is terminated pursuant to Subsection 3(i) hereof. Thereafter, or
in the event your employment shall be terminated by you other than for
Good Reason or by reason of your death, your benefits shall be determined
under the Company's insurance or other compensation programs then in
effect in accordance with the terms of such programs.
(ii) If your employment shall be terminated by the Company for Cause,
Disability or death, or by you other than for Good Reason, the Company
shall pay you your full base salary through the Date of Termination at the
rate in effect at the time Notice of Termination is given, plus all other
amounts to which you are entitled under any insurance and other
compensation programs of the Company at the time such payments are due,
and the Company shall have no further obligations to you under this
Agreement.
(iii) If your employment by the Company shall be terminated (a) by the Company
other than for Cause, Disability or death or (b) by you for Good Reason,
then you shall be entitled to the benefits provided below:
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(A) The Company shall pay you your full base salary through the Date of
Termination at the rate in effect at the time Notice of Termination
is given, plus all other amounts to which you are entitled under any
compensation plan of the Company, at the time such payments are due,
except as otherwise provided below.
(B) In lieu of any further salary payments to you for periods subsequent
to the Date of Termination, the Company shall pay as severance pay to
you a lump sum severance payment (together with the payments provided
in paragraph (C) of this Subsection 4(iii), the "Severance Payments")
equal to [ ] times the sum of your (a) annual base salary in effect
immediately prior to the occurrence of the circumstance giving rise
to the Notice of Termination given in respect thereof, and (b) 100%
of the Target Bonus Amount as designated in Schedule One in Section 4
of the Company's Incentive Bonus Plan times your annual base salary
in effect immediately prior to the occurrence of the circumstance
giving rise to the Notice of Termination.
(C) The Company shall pay to you any deferred compensation, including but
not limited to deferred bonuses, allocated or credited to you as of
the Date of Termination.
(D) The Company shall also pay to you all legal fees and expenses
incurred by you as a result of such termination including all such
fees and expenses, if any, incurred in contesting or disputing any
such termination or in seeking to obtain or enforce any right or
benefit provided by this Agreement.
(E) Taxes - All payments shall be subject to the withholding of such
amounts as the Company is required to be withheld pursuant to any
applicable federal, state, or local law or regulation, and you are
responsible for any tax liability on such payments.
(F) All payments under this letter of agreement and benefits provided
under the program will be contingent upon the execution of an
Application and Release of Claims by you and the Company, and this
Application and Release of Claims shall govern the timing of all
payments made. A copy of the terms and conditions of such Application
and Release of Claims is attached as an appendix to this Agreement.
(G) Limitation on Benefits. Any benefits payable or to be provided
pursuant to this Agreement or otherwise, which constitute "Parachute
Payments" as defined in Section 280G(b)(2)(A)(i) of the Code, shall
be subject to limitation such that the benefits payable or to be
provided under this Agreement, as well as any payments or benefits
provided outside of this Agreement, shall not cause the Company to
have paid an "Excess Parachute Payment" as defined in Section
280G(b)(1) of the Code. Accordingly, anything in this Agreement to
the contrary notwithstanding, in the event that it is determined that
receipt of all Parachute Payments would cause the Company to pay an
Excess Parachute Payment, the Company shall determine, and promptly
notify you of, a "Reduced Amount" which shall be the highest
aggregate amount of Parachute Payments that shall not cause the
Company to have paid an Excess Parachute Payment. You may then elect,
in your sole discretion, which and how much of the Parachute
Payments, including without limitation Parachute Payments made
outside of this
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Agreement, shall be eliminated or reduced (as long as after such
election the "Present Value" (as defined in Section 280G(d)(4) of the
Code) of the aggregate Parachute Payments is equal to the Reduced
Amount, and shall advise the Company in writing of such election
within 10 days of your receipt of notice. If no such election is made
within such 10 day period, the Company may elect which of Parachute
Payments, including without limitation Parachute Payments made
outside of this Agreement, shall be eliminated or reduced (as long as
after such election the Present Value of the aggregate Parachute
Payments is equal to the Reduced Amount) and shall notify you
promptly of such election.
(iv) If your employment shall be terminated (A) by the Company other than for
Cause, Disability or death or (B) by you for Good Reason, then for a [ ]-
month period after such termination, the Company shall arrange to provide
you with life, disability, accident, medical, and dental insurance
benefits substantially similar to those that you are receiving immediately
prior to the Notice of Termination. Benefits otherwise receivable by you
pursuant to this Subsection 4(iv) shall be reduced to the extent
comparable benefits are actually received by you from another employer
during the [ ]-month period following your termination, and any such
benefits actually received by you shall be reported to the Company.
(v) You shall not be required to mitigate the amount of any payment provided
for in this Section 4 by seeking other employment or otherwise, nor shall
the amount of any payment or benefit provided for in this Section 4 be
reduced by any compensation earned by you as the result of employment by
another employer, by retirement benefits, by offset against any amount
claimed to be owed by you to the Company (other than by any cash payments
which may be available to you under the Company's Severance Policy), or
otherwise except as specifically provided in this Section 4.
(vi) In addition to all other amounts payable to you under this Section 4, you
shall be entitled to receive all benefits available to you under the
Company's Employees' Share Option Plan, 401(k) profit sharing plan, and to
Outplacement benefits as defined in Section 5.5 of the Company's Severance
Policy.
5. SUCCESSORS; BINDING AGREEMENT.
(i) The Company will require any successor (whether direct or indirect, by
purchase, merger, share exchange, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no
such succession had taken place. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle you to compensation
from the Company in the same amount and on the same terms as you would be
entitled to hereunder if you terminate your employment for Good Reason
following a Change of Control, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective
shall be deemed the Date of Termination. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any successor
to its business and/or assets as aforesaid which assumes and agrees to
perform this agreement by operation of law, or otherwise.
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(ii) This Agreement shall inure to the benefit of and be enforceable by your
personal or legal representatives, executors, administrators, heirs,
distributees, and legatees. If you should die while any amount would still
be payable to you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this agreement to your legatee or other designee or, if
there is no such designee, to your estate.
(iii) In the event that you are employed by a subsidiary of the Company,
wherever in this Agreement reference is made to the "Company," unless the
context otherwise requires, such reference shall also include such
subsidiary. The Company shall cause such subsidiary to carry out the terms
of this Agreement insofar as they relate to the employment relationship
between you and such subsidiary, and the Company shall indemnify you and
save you harmless from and against all liability and damage you may suffer
as a consequence of such subsidiary's failure to perform and carry out
such terms. Wherever reference is made to any benefit program of the
Company, such reference shall include, where appropriate, the
corresponding benefit program of such subsidiary if you were a participant
in such benefit program on the date a Change of Control has occurred.
6. NOTICE. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notices to the Company shall be directed to the attention of the Board
with a copy to the Secretary of the Company, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
7. MISCELLANEOUS. This Agreement amends and restates the agreement between the
parties dated [ ]. No provision of this Agreement may
be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing and signed by you and such officer as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not expressly set forth in this
Agreement. To the extent that United States federal laws do not otherwise
apply, the Plan shall be construed in accordance with and governed by the laws
of the Cayman Islands.
8. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
9. COUNTERPARTS. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
10. ARBITRATION. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in the State of
Colorado, in accordance with the rules of the American Arbitration Association
then in effect. Judgment may be entered
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on the arbitrator's award in any court having jurisdiction; provided, however,
that you shall be entitled to seek specific performance of your right to be paid
until the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
If this letter sets forth our agreement on the subject matter hereof, kindly
sign and return to the Company the enclosed copy of this letter which will then
constitute our agreement on this subject.
Sincerely,
Apex Silver Mines Ltd.
By ___________________________________
Agreed to as of the _______ day of _____________________, 2000.
Signature: _____________________________
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