Exhibit 10.6
APEX SILVER MINES LIMITED
NON-EMPLOYEE DIRECTORS' SHARE PLAN
1. PURPOSE. The purpose of this Non-Employee Directors' Share Plan (the
"Director Plan") of APEX SILVER MINES LIMITED (the "Company"), is to advance the
interests of the Company and its shareholders by providing a means to attract
and retain highly qualified persons to serve as non-employee directors of the
Company and to enable such persons to acquire or increase a proprietary interest
in the Company, thereby promoting a closer identity of interests between such
persons and the Company's shareholders.
2. DEFINITIONS. In addition to terms defined elsewhere in the Director
Plan, the following are defined terms under the Director Plan:
(a) "Code" means the U.S. Internal Revenue Code of 1986, as amended
from time to time. References to any provision of the Code shall be deemed to
include regulations thereunder and successor provisions and regulations thereto.
(b) "Exchange Act" means the U.S. Securities Exchange Act of 1934,
as amended. References to any provision of the Exchange Act shall be deemed to
include rules thereunder and successor provisions and rules thereto.
(c) "Fair Market Value" of a Share on a given date means the last
sales price or, if last sales information is generally unavailable, the average
of the closing bid and asked prices per Share on such date (or, if there was no
trading or quotation in the stock on such date, on the next preceding date on
which there was trading or quotation) as reported in the WALL STREET JOURNAL;
PROVIDED, HOWEVER, that the "Fair Market Value" of a Share subject to Options
granted effective on the date on which the Company commences an Initial Public
Offering shall be the price of the shares so issued and sold, as set forth in
the first final prospectus used in such Initial Public Offering.
(d) "Initial Public Offering" means an initial public offering of
Shares in a firm commitment underwriting register with the U.S. Securities and
Exchange Commission in compliance with the provisions of the U.S. Securities Act
of 1933, as amended.
(e) "Option" means the right, granted to a director under Section 6,
to purchase a specified number of Shares at the specified exercise price for a
specified period of time under the Director Plan. All Options will be non-
qualified Share Options.
(f) "Participant" means a person who, as a non-employee director of
the Company, has been granted an Option which remains outstanding.
(g) "Share" means a share of the share capital, $.01 par value, of
the Company and such other securities as may be substituted for such share or
such other securities pursuant to Section 7.
3. SHARES AVAILABLE UNDER THE DIRECTOR PLAN. Subject to adjustment as
provided in Section 7, the total number of Shares reserved and available for
issuance under the Director Plan shall not exceed 5 percent of the Company's
share capital. Such Shares may be authorized but unissued Shares, treasury
Shares, or Shares acquired in the market for the account of the Participant. For
purposes of the Director Plan, Shares that may be purchased upon exercise of an
Option will not be considered to be available after such Option has been
granted, except for purposes of issuance in connection with such Option;
PROVIDED, HOWEVER, that, if an Option expires for any reason without having been
exercised in full, the Shares subject to the unexercised portion of such Option
will again be available for issuance under the Director Plan.
4. ADMINISTRATION OF THE DIRECTOR PLAN. The Director Plan will be
administered by the board of directors (the "Board") of the Company; PROVIDED,
HOWEVER, that any action by the Board relating to the Director Plan will be
taken only if, in addition to any other required vote, such action is approved
by the affirmative vote of a majority of the directors who are not then eligible
to participate in the Director Plan.
5. ELIGIBILITY. Each director of the Company who, on any date on which
an Option is to be granted under Section 6, is not an employee of the Company or
any subsidiary of the Company will be eligible, at such date, to be granted an
Option under Section 6. No person other than those specified in this Section 5
will be eligible to participate in the Director Plan.
6. OPTIONS. An Option to purchase the number of Shares equal to $50,000
divided by the Fair Market Value of the Shares on the date of the grant, subject
to adjustment as provided in Section 7, will be automatically granted, (i) at
the effective date of initial election to the Board, to each person so elected
or appointed who is eligible under Section 5 at that date (the "Initial Grant").
In addition, an Option to purchase the number of Shares equal to $50,000 divided
by the Fair Market Value of the Shares on the date of the grant, subject to
adjustment as provided in Section 7, will be automatically granted, at the close
of business of each annual meeting of shareholders of the Company, to each
member of the Board who is eligible under Section 5 at the close of business of
such annual meeting (the "Annual Grant"). Notwithstanding the foregoing, any
person who received an Initial Grant shall not automatically receive an Annual
Grant at the first annual meeting of shareholders if such annual meeting takes
place within three months of the effective date of such person's receipt of an
Initial Grant.
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(a) EXERCISE PRICE. The exercise price per Share purchasable upon
exercise of an Option will be equal to 100% of the Fair Market Value of a Share
on the date of grant of the Option.
(b) OPTION EXPIRATION. A Participant's Option will expire at the
earlier of (i) 10 years after the date of grant or (ii) one year after the date
the Participant ceases to serve as a director of the Company for any reason.
(c) EXERCISABILITY. Each Option may be exercised commencing
immediately upon its grant.
(d) METHOD OF EXERCISE. A Participant may exercise an Option, in
whole or in part, at such time as it is exercisable and prior to its expiration,
by giving written notice of exercise to the Secretary of the Company, specifying
the Option to be exercised and the number of Shares to be purchased, and paying
in full the exercise price in cash (including by check) or by surrender of
Shares already owned by the Participant having a Fair Market Value at the time
of exercise equal to the exercise price, or by a combination of cash and Shares.
7. ADJUSTMENT PROVISIONS.
(a) RECAPITALIZATION. The aggregate number of Shares as to which
Options may be granted to Participants, the number of Shares thereof covered by
each outstanding Option granted or to be granted in accordance with the formula
set forth in Section 6 hereof, and the price per Share thereof in each such
Option, shall all be proportionately adjusted for any increase or decrease in
the number of issued Shares resulting from a subdivision or consolidation of
Shares or other capital adjustment, or the payment of a Share dividend or other
increase or decrease in such Shares, effected without receipt of consideration
by the Company, or other change in corporate or capital structure; provided,
however, that any fractional shares resulting from any such adjustment shall be
eliminated. The Board may also make the foregoing changes and any other changes,
including changes in the classes of securities available, to the extent it is
deemed necessary or desirable to preserve the intended benefits of the Director
Plan for the Company and the Participants in the event of any other
reorganization, recapitalization, merger, consolidation, spin-off, extraordinary
dividend or other distribution or similar transaction. Notwithstanding any other
provision of the Director Plan, the Board may cause any Option granted hereunder
to be canceled in consideration of a cash payment or alternative award made to
the holder of such canceled Option equal in value to the Fair Market Value of
such canceled Option. Notwithstanding anything to the contrary in this Section
7, no issuance of Shares effected pursuant to the terms of the Buy-Sell
Agreement dated as of August 6, 1996 by and among, inter alia, the Company,
Consolidated Commodities Ltd., Argentum LLC and Silver Holdings LDC or certain
entities affiliated therewith, that does not constitute
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a change in control shall result in any adjustment to the number or value of any
Shares to be issued pursuant to any Option hereunder.
(b) INSUFFICIENT NUMBER OF SHARES. If at any date an insufficient
number of Shares are available under the Director Plan for the automatic grant
of Options, Options will be automatically granted proportionately to each
eligible director, to the extent Shares are then available (provided that no
fractional Shares will be issued upon exercise of any Option) and otherwise as
provided under Section 6.
8. CHANGES TO THE DIRECTOR PLAN. The Board may amend, alter, suspend,
discontinue, or terminate the Director Plan or authority to grant Options under
the Director Plan without the consent of shareholders or Participants, except
that any amendment or alteration will be subject to the approval of the
Company's shareholders at or before the next annual meeting of shareholders for
which the record date is after the date of such Board action if such shareholder
approval is required by any U.S. federal or state law or regulation or the rules
of any stock exchange or automated quotation system as then in effect, and the
Board may otherwise determine to submit other such amendments or alterations to
shareholders for approval; PROVIDED, HOWEVER, that, without the consent of an
affected Participant, no such action may materially impair the rights of such
Participant with respect to any previously granted Option or any previous
payment of fees in the form of Shares.
9. GENERAL PROVISIONS.
(a) AGREEMENTS. Options may be evidenced by agreements or other
documents executed by the Company and the Participant incorporating the terms
and conditions set forth in the Director Plan, together with such other terms
and conditions not inconsistent with the Director Plan, as the Board may from
time to time approve.
(b) COMPLIANCE WITH LAWS AND OBLIGATIONS. The Company will not be
obligated to issue or deliver Shares in connection with any Option in a
transaction subject to the registration requirements of the Securities Act of
1933, as amended, or any other U.S. federal or state securities law, any
requirement under any listing agreement between the Company and any stock
exchange or automated quotation system, or any other law, regulation, or
contractual obligation of the Company, until the Company is satisfied that such
laws, regulations, and other obligations of the Company have been complied with
in full. Certificates representing Shares issued under the Director Plan will be
subject to such stop-transfer orders and other restrictions as may be applicable
under such laws, regulations, and other obligations of the Company, including
any requirement that a legend or legends be placed thereon.
(c) LIMITATIONS ON TRANSFERABILITY. Options will not be transferable
by a Participant except by will or the laws of descent and distribution or to a
Beneficiary in the event of the Participant's death, and, if exercisable, shall
be
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exercisable during the lifetime of a Participant only by such Participant or
his guardian or legal representative. Notwithstanding the foregoing, the
Committee may, in its discretion, authorize all or a portion of the Options
granted to a Participant to be on terms which permit transfer by such
Participant to (i) the spouse, children or grandchildren of such Participant
("Immediate Family Members"), (ii) a trust or trusts for exclusive benefit of
such Immediate Family Members, or (iii) a partnership in which such Immediate
Family Members are the only partners, provided that (x) there may be no
consideration for any such transfer, (y) the Option must be approved by the
Committee and must expressly provide for transferability in a manner consistent
with this Section, and (z) subsequent transfers of transferred Options shall be
prohibited except those occurring by laws of descent and distribution. Following
transfer, any such awards shall continue to be subject to the same terms and
conditions as were applicable immediately prior to transfer, provided that for
purposes of the Director Plan, the term Participant shall be deemed to refer to
the transferee. Options may not be pledged, mortgaged, hypothecated or otherwise
encumbered, and shall not be subject to the claims of creditors.
(d) NO RIGHT TO CONTINUE AS A DIRECTOR. Nothing contained in the
Director Plan or any agreement hereunder will confer upon any Participant any
right to continue to serve as a director or advisory director of the Company.
(e) NO SHAREHOLDER RIGHTS CONFERRED. Nothing contained in the
Director Plan or any agreement hereunder will confer upon any Participant (or
any person or entity claiming rights by or through a Participant) any rights of
a shareholder of the Company unless and until Shares are in fact issued to such
Participant (or person) or, in the case an Option, such Option is validly
exercised in accordance with Section 6.
(f) NONEXCLUSIVITY OF THE DIRECTOR PLAN. Neither the adoption of the
Director Plan by the Board nor its submission to the shareholders of the Company
for approval shall be construed as creating any limitations on the power of the
Board to adopt such other compensatory arrangements for directors as it may deem
desirable.
(g) GOVERNING LAW. The validity, construction, and effect of the
Director Plan and any agreement hereunder will be determined in accordance with
the laws of the Cayman Islands.
10. SHAREHOLDER APPROVAL, EFFECTIVE DATE, AND DIRECTOR PLAN TERMINATION.
The Director Plan will be effective as of the date of its adoption by the Board,
subject to shareholder approval prior to the commencement of the Initial Public
Offering, and, unless earlier terminated by action of the Board, shall terminate
at such time as no Shares remain available for issuance
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under the Director Plan and the Company and Participants have no further rights
or obligations under the Director Plan.
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