Exhibit 10.11
APEX SILVER MINES LIMITED
Caledonian House
Mary Street, P.O. Box 1043
George Town, Grand Cayman
Cayman Islands
August 14, 1996
FAX: 011-613-9824-8475
Mr. Keith R. Hulley
6 Boandyne Court
Toorak, VIC 3142, Australia
Re: Apex Silver Mines Limited Offer Of Employment
Dear Keith,
In line with our recent discussions, we are pleased to present herein the terms
of our employment offer with Apex Silver Mines Limited or its United States
affiliate as applicable (collectively the "Company").
I. THE POSITION
We have discussed, at some length, the content of the job and I believe we
are in agreement on it. As I now envision it the principal
responsibilities of this position involve:
. Determine and provide to the Chairman views on optimum strategies for
development as well as relevant implementation programs and timetable.
Function along with the Chairman and Mining Oriented Director as key
participants in the strategic development process.
. Manage the evaluation of specific potential acquisitions, i.e., land
positions, reserves, abandoned mines and active mines from both a
future economic and risk assessment point of view.
. Manage mine/mill development programs to include all prefeasibility and
feasibility studies, involving both underground and open pit mines.
. Assure that all significant design, engineering and construction work
is done in a cost and quality effective mode in a manner consistent
with the company's strategy, long term plan and financial and people
resources. Oversee the preparation of prefeasibility and feasibility
studies and participate in them at key points.
. Assure that a satisfactory transition is made from a development
project to an operating mine/mill.
. Build a solid core of operating management that can function
effectively in all the company's properties.
Mr. Keith R. Hulley
August 14, 1996
Page 2
. Provide input to the Chairman on the current operating capabilities of
proposed joint venture partner(s).
. Function as principal operating liaison with joint venture partners.
. Participate, along with the Chairman, in the formulation of the
internal capital development process and programs for the Company as
decided on by the Chairman.
. Take the management responsibility for the successful execution of
these programs.
. Participate in the formulation of the planning and budget process for
all properties for which the company has operating responsibilities
and/or minority rights and veto powers.
. Stay on top of all environmental developments, domestic and
international and assure that they are handled/managed effectively.
. Provide judgments to the CEO as to how effectively the company is
interfacing with the host country governments, culture and other mining
companies operating there.
. Be prepared to travel extensively as required by the needs of the
business.
Naturally, you agree that all information concerning the Company business
will be treated as confidential.
You will be based in Denver, Colorado, and travel will be based upon the
requirements of the position. You agree to devote your full working time
to the Apex Silver Mines Group of companies You agree not to accept any
additional Directorships unless approved by Apex's Chairman.
II. TITLE AND REPORTING RELATIONSHIPS
1. TITLE
Your title will be Executive Vice President and Chief Operating
Officer. In addition, upon your joining the company, I will recommend
to the Board of Directors that you be elected a Director of the
company.
2. REPORTING RELATIONSHIPS
You will report directly to me.
Mr. Keith R. Hulley
August 14, 1996
Page 3
III. START DATE
You may start employment with us at a mutually agreed upon date. Your
compensation and benefits will commence on your first day of employment.
IV. COMPENSATION
1. BASE COMPENSATION
You will be paid an annual base compensation of US$225,000, payable
monthly. Your first review of base compensation will be in 18 months of
your joining the company.
2. BONUS
I plan to install a Performance Bonus Plan at Apex covering the
Calendar Year 1998 to be paid out according to the provisions of the
Performance Bonus Plan when it is adopted which will undoubtedly occur
after 1998.
3. BENEFITS
Quite obviously a mining junior does not compete with a major mining
company in terms of providing a complete comprehensive and top of the
line benefit plan. As you know, I recently commissioned Anderson &
Schwab to conduct a compensation and benefit survey comprising juniors,
intermediate and senior mining companies. I then asked A&S to recommend
what they considered to be relevant competitive benefit plans that
would be suitable for Apex.
These plans, which are discussed below represent our present thinking
on benefits that we plan to adopt for Apex. Although these plans are
likely to be adopted, they have not yet been finalized.
Apex' intent with regard to each benefit plan is as follows:
Title of Plan Likely Apex Plan
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Medical Plan HMO or PPO.
If PPO: 80/20 coverage, deductible
$200 per person, $400 per family,
annual maximum $1,000 per person,
$2,000 per family, $1,000,000 lifetime
maximum.
Dental Plan Either a plan with a $150 family
deductible and $1,250 maximum annual
benefit or a Dental HMO.
Vision Plan None, but a Medical Reimbursement
Account is contemplated, funded by
Mr. Keith R. Hulley
August 14, 1996
Page 4
the Company, that can be used for
certain health care expenditures such
as vision.
Short-Term Disability 6 months full pay based on service.
Long-Term Disability 66% of pay up to $12K per month.
Survivor Benefit Plan Probably won't have one
Life Insurance Plan 2 x salary at $500K maximum
AD&D Insurance Plan 2 x salary at $500K maximum
Travel Accident Insurance Plan Covered by life insurance and AD&D
insurance
Savings Plan 401K plan or equivalent savings plan
with company matching 50% of
individual's contribution up to 6% of
individual's salary up to a federally
mandated cap, which is currently
$150K. Increase in Apex's
contributions to be considered when
company is in production and has a
positive cash flow.
Pension Plan Some form of pension to be considered
in the long-term future.
Should you accept this offer of employment, it is our intent to work
with you regarding your being covered under these plans in a timely
way. This work will be done by A&S' Dick Hinkel, who is a career long
human resources specialist whose prior assignment (for fifteen years)
was as Vice President, Human Resources, for Homestake Mining. Dick took
the lead in doing the compensation and benefits survey described above.
4. STOCK OPTIONS
You will be eligible for participation in the Company's stock option
plan. Thus, we will provide you with options on approximately
$1,000,000 of stock of Apex Silver Mines Limited. The price of Apex's
stock is based on the value of the company (US $160 million) as was
determined by the recent successful completion of our private
placement.
. You will vest in these options over a four year period at 25
percent per year.
Mr. Keith R. Hulley
August 14, 1996
Page 5
. You will be eligible to vest immediately upon joining the Company,
at which time you will be subject to the same shareholders'
agreement entered into by all Apex's shareholders.
V. OTHER
1. VACATION
Four weeks vacation per year.
2. REIMBURSABLE EXPENSES
. You will be reimbursed for all expenses incurred in connection with
travel on company business.
, The company is considering and probably will adopt the policy of
providing corporate credit cards to cover travel, hotel, etc.
However, a final judgment on this point has not been made.
. As to class of travel, domestic travel will be coach and all
international travel will be business class.
. Frequent flyer miles will be the property of the user.
3. YOUR PAY
Upon joining, and until Apex establishes a Denver office, you will be
paid by wire to your bank account.
4. COMPANY OFFICE
The company will establish a Denver office but it will take a while to
do so. Until then the company will require that you work out of your
home when you are in Denver. This, of course, means that if it will
take a month or even longer before an office is established, that the
company would expect you to put in a separate business telephone line
and a fax machine for which they would reimburse you fully for both
installation and use.
5. ALLOWANCE FOR MOVING/RELOCATION
In principle, Apex will pay the moving expenses for you and your wife
from Melbourne to Denver in accordance with the provisions of generally
accepted relocation plans of mid sized mining companies. I have asked
A&S to recommend an appropriate relocation plan to cover its senior
management people which plan will apply to your forthcoming relocation.
VI. SEVERANCE AGREEMENT
In the event the Company should desire to terminate your employment, except
for cause, within three years after your employment starting date, you will
be entitled to severance pay for a twelve-month period at your existing
salary, as well as a
Mr. Keith R. Hulley
August 14, 1996
Page 6
continuation of your benefits. Upon such an occurrence, bonus awards and
stock options will be suspended.
You agree that in the event you leave Apex that for a period of two years
you will not join any company whose primary business is the acquisition and
development of silver mines.
* * * *
I have enjoyed getting acquainted with you over the last six months. As a
result of getting to know you, I believe that you can make a major contribution
to our business and that you will find the work interesting and challenging. I
hope you will find these terms of employment attractive. If you accept our
offer of employment, please sign in the space indicated below and return the
designated copy to us.
Sincerely,
/s/ Thomas S. Kaplan
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Thomas S. Kaplan
Chairman
AGREED TO AND ACCEPTED:
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/s/ Keith R. Hulley
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Keith R. Hulley
September 2, 1996
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Date