Exhibit 10.7
APEX SILVER MINES LIMITED
EMPLOYEES' SHARE OPTION PLAN
I. PURPOSE.
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The purpose of the Apex Silver Mines Limited (the "Company")
Employees' Share Option Plan (the "Employee Plan") is to attract and retain and
provide incentives to employees, officers, consultants and agents of the
Company, and to thereby increase overall shareholder value. The Employee Plan
generally provides for the granting of Shares options, Shares appreciation
rights, restricted shares or any combination of the foregoing to the eligible
participants.
II. DEFINITIONS.
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(a) "Award" includes, without limitation, Share options
(including incentive Share options within the meaning of Section 422(b) of
the Code) with or without stock appreciation rights, dividend equivalent
rights, Share awards, restricted Share awards, or other awards that are
valued in whole or in part by reference to, or are otherwise based on,
Shares ("other Share-based Awards"), all on a stand alone, combination or
tandem basis, as described in or granted under this Employee Plan.
(b) "Award Agreement" means a written agreement setting forth
the terms and conditions of each Award made under this Employee Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" means (i) 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, (ii) conduct
tending to bring the Company into substantial public disgrace or disrepute,
(iii) substantial and repeated failure to perform duties as reasonably
directed by the Board, (iv) gross negligence or willful misconduct with
respect to the Company or any of its Subsidiaries, or (v) any other
material breach of any agreement between the Participant and the Company or
its Subsidiaries which is not cured within 15 days after written notice
thereof to the Participant.
(e) "Change of Control" shall be deemed to have occurred if, at
any time following the Effective Date, (i) two of the three Founders sell
or dispose of 50 percent or more of the Shares held by such Founders on the
Effective Date to any Person who was not either (A) an Affiliate of the
Company on the Effective Date, or (B) a Permitted Transferee, (ii) at least
two
of the three Founders, or their respective designees, do not continue
as senior managers or members of the Board other than as a result of death
or Disability, or (iii) all or substantially all of the Company's assets
are sold.
(f) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(g) "Committee" means the Compensation Committee of the Board or
such other committee of the Board as may be designated by the Board from
time to time to administer this Employee Plan, provided however, that the
Committee shall consist of at least two (2) nonemployee directors within
the meaning of Rule 16b-3(b)(3).
(h) "Shares" means the Company's ordinary shares, par value
US$0.01 and other rights with respect to such shares.
(i) "Company" means Apex Silver Mines Limited, an exempted
limited liability company organized and existing under the laws of the
Cayman Islands.
(j) "Disability" means the Participant's inability, due to
illness, accident, injury, physical or mental incapacity or other
disability, to carry out effectively his duties and obligations to the
Company and its Subsidiaries or to participate effectively and actively in
the management of the Company and its Subsidiaries for a period anticipated
to last at least six (6) months, as determined in the good faith judgment
of the Board. In the event the Company adopts a plan which provides for
long-term disability insurance, "Disability" shall have the meaning set
forth in such plan.
(k) "Employee" means an employee of the Company or a
Subsidiary.
(l) "Fair Market Value" means the closing price for the Shares
as officially reported on the relevant date (or if there were no sales on
such date, on the next preceding date on which such closing price was
recorded) by the principal national securities exchange on which the Shares
are listed or admitted to trading, or, if the Shares are not listed or
admitted to trading on any such national securities exchange, the closing
price as furnished by the National Association of Securities Dealers
through NASDAQ or a similar organization, or if NASDAQ is no longer
reporting such information, or, if the Shares are not quoted on NASDAQ, as
determined in good faith by resolution of the Committee (whose
determination shall be conclusive), based on the best information available
to it.
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(m) "Founders" means Consolidated Commodities Ltd., Argentum LLC
and Silver Holdings LDC and their respective shareholders or affiliates as
of the date hereof.
(n) "Participant" means an employee, officer, consultant or
agent who has been granted an Award under the Plan.
(o) "Plan Year" means a twelve-month period beginning with
January 1 of each year.
(p) "Qualified Public Offering" means the sale in a firm
commitment underwritten public offering registered under the Securities Act
of Shares.
(q) "Retirement" means (i) a Participant's retirement from the
Company or a Subsidiary, as applicable (other than for Cause), or (ii) as
otherwise defined by the Committee.
(r) "Subsidiary" means any corporation or other entity, whether
organized under the laws of the Cayman Islands or any other jurisdiction,
in which the Company has or obtains, directly or indirectly, a proprietary
interest of more than 50 percent by reason of Shares ownership or
otherwise.
III. ELIGIBILITY.
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Any person selected by the Committee who is an employee, officer,
consultant or agent of the Company or any Subsidiary, selected by the Committee
is eligible to receive an Award. Notwithstanding the foregoing, only employees
of the Company and any present or future corporation which is or may be a
"subsidiary corporation" of the Company (as such term is defined in Section
424(q) of the Code) shall be eligible to receive incentive Share options.
IV. EMPLOYEE PLAN ADMINISTRATION.
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(a) Except as otherwise determined by the Board, the Employee
Plan shall be administered by the Committee. The Board, or the Committee to
the extent determined by the Board, shall periodically make determinations
with respect to the participation of employees, officers, consultants and
agents in the Employee Plan and, except as otherwise required by law or
this Employee Plan, the grant terms of Awards, including vesting schedules,
exercise, awards price, restriction or option period, dividend rights,
post-retirement and termination rights, payment alternatives such as cash,
Shares, contingent awards or other means of payment consistent with the
purposes of this Employee Plan, and such other terms and conditions as the
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Board or the Committee deems appropriate which shall be contained in an
Award Agreement with respect to a Participant.
(b) The Committee may delegate to one or more of its members or
to any other persons such ministerial duties as it may deem advisable. The
Committee may also employ attorneys, consultants, accountants, or other
professional advisors and shall be entitled to rely upon the advice,
opinions or valuations of any such advisors.
(c) The Committee shall have authority to interpret and construe
the provisions of the Employee Plan and any Award Agreement and make
determinations pursuant to any Employee Plan provision or Award Agreement
which shall be final and binding on all persons. No member of the Committee
shall be liable for any action or determination made in good faith, and the
members shall be entitled to indemnification and reimbursement in the
manner provided in the Company's Memorandum and Articles of Association, as
the same may be amended from time to time, or as otherwise provided in any
agreement between any such member and the Company.
(d) No member of the Committee, nor any person to whom
ministerial duties have been delegated, shall be personally liable for any
action, interpretation or determination made with respect to the Employee
Plan or awards made thereunder and each member of the Committee shall be
fully indemnified and protected by the Company with respect to any
liability he or she may incur with respect to any such action,
interpretation or determination, to the extent permitted by applicable law
and to the extent provided in the Company's Memorandum and Articles of
Association, as amended from time to time, or under any agreement between
any such member and the Company.
(e) The Committee shall have the authority at any time to
provide for the conditions and circumstances under which Awards shall be
forfeited. The Committee shall have the authority to accelerate the vesting
of any Award and the times at which any Award becomes exercisable.
V. SHARES SUBJECT TO THE PROVISIONS OF THIS PLAN.
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(a) The shares of the Company's share capital subject to the
provisions of this Employee Plan shall be authorized but unissued Shares
and treasury Shares. Subject to adjustment in accordance with the
provisions of Section X, and subject to Section V(c) below, the total
number of Shares available for grants of Awards shall not exceed 10 percent
of the Company's share capital.
(b) The grant of a restricted Share Award shall be deemed to be
equal to the maximum number of Shares which may be issued under the
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Award. Awards payable only in cash will not reduce the number of Shares
available for Awards granted under the Employee Plan.
(c) There shall be carried forward and be available for Awards
under the Employee Plan, in addition to Shares available for grant under
paragraph (a) of this Section V, all of the following: (i) any unused
portion of the limit set forth in paragraph (a) of this Section V; (ii)
Shares represented by Awards which are canceled, forfeited, surrendered,
terminated, paid in cash or expire unexercised; and (iii) the excess amount
of variable Awards which become fixed at less than their maximum
limitations.
VI. AWARDS UNDER THIS EMPLOYEE PLAN .
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As the Board or Committee may determine, the following types of Awards
and other Share-based Awards may be granted under this Employee Plan on a stand
alone, combination or tandem basis:
(i) Share Options. A right to buy a specified number of Shares
at a fixed exercise price during a specified time, all as the
Committee may determine. The exercise price of options granted prior
to a Qualified Public Offering shall be $8.00 per Share. The exercise
price of any option granted after a Qualified Public Offering shall
not be less than 100 percent of the Fair Market Value of the Shares on
the date of grant of the Award unless the Committee determines that an
exercise price lower than the Fair Market Value is warranted. In the
case of incentive Share options granted to an employee owning
(actually or constructively under Section 422(d) of the Code), more
than ten percent (10%) of the total combined voting power of all
classes of shares of the Company or of a Subsidiary (a "10%
Shareholder"), the price of any such option shall not be less than 110
percent of the Fair Market Value of the Shares on the date of grant.
(A) Limitation on Time of Grant. No grant of a Share Options
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shall be made after August 1, 2006.
(B) Term. The term of each Share option granted hereunder shall
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be determined by the Committee; provided that
notwithstanding any other provision of the Employee Plan, in
no event shall a Share option be exercisable after 10 years
from the date it is granted.
(ii) Incentive Share Options. An Award in the form of a share
options which shall comply with the requirements of Section 422
of the Code or any successor section as it may be amended from
time to time.
(A) Limitation on Amount of Incentive Share Options. In the
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case of incentive Share options, the aggregate Fair Market
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Value (determined at the time the incentive Share options
are granted) of the Shares with respect to which incentive
Share options are exercisable for the first time by any
optionee during any calendar year (under all plans of the
Company and any Subsidiary) shall not exceed $100,000.
(B) Limitation on Time of Grant. No grant of incentive Share
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options shall be made under the Employee Plan more than ten
(10) years after the date the Employee Plan is approved by
shareholders of the Company.
(C) Term. Notwithstanding any other provision of the Employee
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Plan, in no event shall incentive Share options be
exercisable after ten (10) years from the date they are
granted, or in the case of incentive Share options granted
to a 10% shareholder, five (5) years from the date they are
granted.
(iii) Share Appreciation Rights. Rights, which may or may not be
contained in the grant of share options or incentive Share options, to
receive in cash (or its equivalent value in Shares) the excess of the
Fair Market Value of the Shares on the date the rights are surrendered
over the options exercise price or other price specified in the Award
Agreement. (iv) Restricted Shares. The issuance of Shares to a
Participant subject to forfeiture until such restrictions, terms and
conditions as the Committee may determine are fulfilled.
(v) Dividend or Equivalent. A right to receive dividends or
their equivalent in value in Shares, cash or in a combination of both
with respect to any new or previously existing Award.
(vi) Share Awards. The issuance of Shares, which may be on a
contingent basis, to a Participant. (vii) Other Share-Based Awards.
Other Share-based Awards which are related to or serve a similar
function to those Awards set forth in this Section VI.
VII. AWARD AGREEMENTS.
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Each Award under the Employee Plan shall be evidenced by an Award
Agreement setting forth the terms and conditions of the Award and executed by
the Company and Participant.
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VIII. OTHER TERMS AND CONDITIONS.
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(a) Assignability. Unless provided to the contrary in any Award,
no Award shall be assignable or transferable except by will or by the laws
of descent and distribution and, during the lifetime of a Participant, the
Award shall be exercisable only by such Participant.
(b) Termination of Employment or Other Relationship. The
Committee shall determine the disposition of the grant of each Award in
the event of the retirement, disability, death or other termination of a
Participant's employment or other relationship with the Company or a
Subsidiary.
(c) Rights as a Shareholder. A Participant shall have no rights
as a shareholder with respect to Shares covered by an Award until the date
the Participant is the holder of record. No adjustment will be made for
dividends or other rights for which the record date is prior to such date.
(d) No Obligation to Exercise. The grant of an Award shall
impose no obligation upon the Participant to exercise the Award.
(e) Payments by Participants. The Committee may determine that
Awards for which a payment is due from a Participant may be payable: (i)
in U.S. dollars by personal check, bank draft or money order payable to
the order of the Company, by money transfers or direct account debits;
(ii) through the delivery of Shares with a Fair Market Value equal to the
total payment due from the Participant; (iii) pursuant to a broker-
assisted "cashless exercise" program if established by the Company; (iv)
by a combination of the methods described in (i) through (iii) above; or
(v) by such other methods as the Committee may deem appropriate.
(f) Exercise of Awards. Awards shall be exercisable at such
times, or upon the occurrence of such event or events as the Committee
shall determine at or subsequent to grant. Awards may be exercised in
whole or in part. Shares purchased upon the exercise of an Award shall be
paid for in full at the time of such purchase. Such payment may be made
(i) the deduction of withholding and any other taxes required by law will
be made from all amounts paid in cash and (ii) in the case of payments of
Awards in Shares, the Participant shall be required to pay the amount of
any taxes required to be withheld prior to receipt of such Shares, or
alternatively, a number of Shares the Fair Market Value of which equals
the amount required to be withheld may be deducted from the payment.
(g) Share Certificates. All Share certificates representing
Shares acquired pursuant to the exercise of an option or any other award
issued by the Company shall contain, until such time as their has been a
Qualified Public Offering of Shares, a legend substantially in the
following form:
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"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE SOLD, TRANSFERRED, ASSIGNED FOR HYPOTHECATED UNLESS THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES.
THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT OR THE COMPANY
RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF THESE SECURITIES
REASONABLY SASTISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SUCH.
IN ADDITION, THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN TRANSFERS AND VOTING RESTRICTIONS PURSUANT TO A
SHAREHOLDERS' AGREEMENT AMONG THE COMPANY AND CERTAIN OF THE COMPANY'S
MEMBERS. A COPY OF SUCH SHAREHOLDERS' AGREEEMENT WILL BE FURNISHED WITHOUT
CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST."
(h) Listing and Qualification of Shares. The Employee Plan and
grant and exercise of options or other awards hereunder, and the
obligation of the Company to sell and deliver Shares under such awards,
shall be subject to all applicable United States federal and state laws,
rules and regulations and to such approvals by any government or
regulatory agency as may be required. The Company, in its discretion, may
postpone the issuance or delivery of Shares upon any exercise of an Award
until completion of any stock exchange listing, or other qualification of
such Shares under any United States federal or state law rule or
regulation as the Company may consider appropriate, and may require any
individual to whom an Award is granted, such individual's beneficiary or
legal representative, as applicable, to make such representations and
furnish such information as the Committee may consider necessary,
desirable or advisable in connection with the issuance or delivery of the
shares in compliance with applicable laws, rules and regulations.
(i) Non-Uniform Determinations. The Committee's determinations
under the Employee Plan (including, without limitation, determinations of
the persons to receive Awards, the form, term, provisions, amount and
timing of the grant of such Awards and of the Agreements evidencing the
same) need not be uniform and may be made by it selectively
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among persons who receive, or are eligible to receive, Awards under the
Employee Plan, whether or not such persons are similarly situated.
IX. TERMINATION, MODIFICATION AND AMENDMENTS.
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(a) The Board may at any time terminate the Employee Plan or
from time to time make such modifications or amendments of the Employee
Plan as it may deem advisable; provided, however, that the Board shall not
make any material amendments to the Employee Plan without the approval of
at least the affirmative vote of the holders of a majority of the
outstanding Shares of the Company present or represented and entitled to
vote at a duly held Shareholders meeting.
(b) No termination, modification or amendment of the Employee
Plan may adversely affect the rights conferred by an Award without the
consent of the recipient thereof.
X. RECAPITALIZATION.
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The aggregate number of Shares as to which Awards may be granted to
Participants, the number of Shares thereof covered by each outstanding Award and
by each option Award granted or to be granted in accordance with the formula set
forth in paragraph (ii) of Section VI hereof, and the price per Share thereof in
each such Award, 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 Committee 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 Employee 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 Employee Plan or the Award Agreement,
the Committee may cause any Award granted hereunder to be canceled in
consideration of a cash payment or alternative Award made to the holder of such
canceled Award equal in value to the Fair Market Value of such canceled Award.
Notwithstanding anything to the contrary in this Section X, 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 and the Founders, or
certain entities affiliated therewith, that does not constitute a change in
control shall result in any adjustment to the number or value of any shares to
be issued pursuant to any Award hereunder.
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XI. NO RIGHT TO EMPLOYMENT.
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No person shall have any claim or right to be granted an Award, and
the grant of an Award shall not be construed as giving a Participant the right
to be retained in the employ of, or in any other relationship with, the Company
or any Subsidiary. Further, the Company and each Subsidiary expressly reserve
the right at any time to dismiss a Participant free from any liability, or any
claim under the Employee Plan, except as provided herein or in any Award
Agreement issued hereunder.
XII. GOVERNING LAW.
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To the extent that United States federal laws do not otherwise
control, the Employee Plan shall be construed in accordance with and governed by
the laws of the Cayman Islands.
XIII. SAVINGS CLAUSE.
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This Employee Plan is intended to comply in all aspects with
applicable laws and regulations. In case any one more of the provisions of this
Employee Plan shall be held invalid, illegal or unenforceable in any respect
under applicable law or regulation, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby
and the invalid, illegal or unenforceable provision shall be deemed null and
void; however, to the extent permissible by law, any provision which could be
deemed null and void shall first be construed, interpreted or revised
retroactively to permit this Employee Plan to be construed in compliance with
all applicable laws so as to foster the intent of this Plan.
XIV. EFFECTIVE DATE AND TERM.
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The effective date of this Employee Plan is August 1, 1996. The
Employee Plan shall terminate on the tenth anniversary of the date of the
adoption of this Employee Plan. No awards shall be granted after the termination
of the Employee Plan.
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