EXHIBIT 1.1
W&S DRAFT
11/13/97
Apex Silver Mines Limited
7,200,000 Shares/1/
Ordinary Shares
($.01 par value)
U.S. Underwriting Agreement
New York, New York
November , 1997
Salomon Brothers Inc
PaineWebber Incorporated
Scotia Capital Markets (USA) Inc.
Smith Barney Inc.
As U.S. Representatives of the several
U.S. Underwriters,
c/o Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
Apex Silver Mines Limited, a Cayman Islands corporation (the
"Company") proposes to sell to the underwriters named in Schedule I hereto (the
"U.S. Underwriters"), for whom you (the "U.S. Representatives") are acting as
representatives, 7,200,000 shares of Ordinary Shares, $.01 par value ("Ordinary
Shares"), of the Company, (said shares to be issued and sold by the Company
being hereinafter called the "U.S. Underwritten Securities"). The Company also
proposes to grant to the U.S. Underwriters an option to purchase up to 1,080,000
additional shares of Ordinary Shares (the "U.S. Option Securities"; the U.S.
Option Securities, together with the U.S. Underwritten Securities, being
hereinafter called the "U.S. Securities"). It is understood that the Company is
concurrently entering into an International Underwriting Agreement dated the
date hereof (the "International Underwriting Agreement") providing for the sale
by the Company of an aggregate of 1,800,000 shares of Ordinary Shares (said
shares to be sold by the Company pursuant to the International Underwriting
Agreement being hereinafter called the "International Underwritten Securities"),
and providing for the grant to the International Underwriters of an option to
purchase from the Company
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/1/ Plus an option to purchase from the Company up to 1,350,000 additional
shares to cover over-allotments.
up to 270,000 additional shares of Ordinary Shares (the "International Option
Securities"; the International Option Securities, together with the
International Underwritten Securities, being hereinafter called the
"International Securities" and the U.S. Securities, together with the
International Securities, being hereinafter called the "Securities"). It is
further understood and agreed that the International Underwriters and the U.S.
Underwriters have entered into an Agreement Between U.S. Underwriters and
International Underwriters dated the date hereof (the "Agreement Between U.S.
Underwriters and International Underwriters"), pursuant to which, among other
things, the International Underwriters may purchase from the U.S. Underwriters a
portion of the U.S. Securities to be sold pursuant to the U.S. Underwriting
Agreement and the U.S. Underwriters may purchase from the International
Underwriters a portion of the International Securities to be sold pursuant to
the International Underwriting Agreement. To the extent there are no additional
U.S. Underwriters listed on Schedule I other than you, the term U.S.
Representatives as used herein shall mean you, as U.S. Underwriters, and the
terms U.S. Representatives and U.S. Underwriters shall mean either the singular
or plural as the context requires.
1. Representations and Warranties.
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(a) The Company represents and warrants to, and agrees with, each U.S.
Underwriter as set forth below in this Section 1. Certain terms used in this
Section 1 are defined in Section 17 hereof.
(i) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement (file number 333-
34685) on Form S-1, including related preliminary prospectuses, for the
registration under the Act of the offering and sale of the Securities. The
Company may have filed one or more amendments thereto, including the
related preliminary prospectuses, each of which has previously been
furnished to you. The Company will next file with the Commission either
(A) prior to the Effective Date of such registration statement, a further
amendment to such registration statement (including the form of final
prospectus) or (B) after the Effective Date of such registration statement,
final prospectuses in accordance with Rules 430A and 424(b)(1) or (4). In
the case of clause (B), the Company has included in such registration
statement, as amended at the Effective Date, all information (other than
Rule 430A Information) required by the Act and the rules there under to be
included in such registration statement and the Prospectuses. As filed,
such amendment and form of final prospectuses, or such final prospectuses,
shall contain all Rule 430A Information, together with all other such
required information, and, except to the extent the U.S. Representatives
shall agree in writing to a modification, shall be in all substantive
respects in the form furnished to you prior to the Execution Time or, to
the extent not completed at the Execution Time, shall contain only such
specific additional information and other changes (beyond that contained in
the latest U.S. Preliminary Prospectus) as the Company has advised you,
prior to the Execution Time, will be included or made therein.
It is understood that two forms of prospectus are to be used in
connection with the offering and sale of the Securities: one form of
prospectus relating to the U.S. Securities,
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which are to be offered and sold to United States and Canadian Persons, and
one form of prospectus relating to the International Securities, which are
to be offered and sold to persons other than United States and Canadian
Persons. The two forms of prospectus are identical except for the outside
front cover page, the inside front cover page, the discussion under the
heading "Underwriting" and the outside back cover page. Such form of
prospectus relating to the U.S. Securities as first filed pursuant to Rule
424(b) after the Execution Time or, if no filing pursuant to Rule 424(b) is
made, such form of prospectus included in the Registration Statement at the
Effective Date, is hereinafter called the "U.S. Prospectus"; such form of
prospectus relating to the International securities as first filed pursuant
to Rule 424(b) after the Execution Time or, if no filing pursuant to Rule
424(b) is made, such form of prospectus included in the Registration
Statement at the Effective Date, is hereinafter called the "International
Prospectus"; and the U.S. Prospectus and the International Prospectus are
hereinafter collectively called the "Prospectuses".
(ii) On the Effective Date, the Registration Statement did or
will, and when the Prospectuses are first filed (if required) in accordance
with Rule 424(b) and on the Closing Date (as defined herein) and on any
date on which shares sold in respect of the U.S. Underwriters' over-
allotment option are purchased, if such date is not the Closing Date (a
"settlement date"), each Prospectus (and any supplements thereto) will,
comply in all material respects with the applicable requirements of the Act
and the rules thereunder; on the Effective Date and at the Execution Time,
the Registration Statement did not or will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date, each Prospectus, if not filed
pursuant to Rule 424(b), will not, and on the date of any filing pursuant
to Rule 424(b) and on the Closing Date and any settlement date, each
Prospectus (together with any supplement thereto) will not, include any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
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however, that the Company makes no representations or warranties as to the
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information contained in or omitted from the Registration Statement, or the
Prospectuses (or any supplement thereto) in reliance upon and in conformity
with information furnished herein or in writing to the Company by or on
behalf of any U.S. Underwriter through the U.S. Representatives
specifically for inclusion in the Registration Statement or the
Prospectuses (or any supplement thereto).
(iii) The subsidiaries of the Company listed on Annex A hereto
(individually a "Significant Subsidiary" and collectively, the "Significant
Subsidiaries") are the Significant Subsidiaries of the Company (within the
meaning of Rule 1-02 of Regulation S-X under the Act). The Company and
each Significant Subsidiary has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized with full corporate
power and authority to own its properties and conduct its business as
described in each Prospectus, and is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each
jurisdiction which
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requires such qualification, except where any failure to be so qualified
would not individually or in the aggregate have a material adverse effect
on the condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole.
(iv) All the outstanding shares of capital stock of each
Significant Subsidiary have been duly and validly authorized and issued and
are fully paid and nonassessable, and, except as otherwise set forth in the
Prospectuses, all outstanding shares of capital stock of the Subsidiaries
are owned directly or indirectly by the Company free and clear of any
perfected security interest or any other security interests, claims, liens
or encumbrances.
(v) The Company's authorized equity capitalization is as set
forth in the Prospectuses; the Ordinary Shares of the Company conform in
all material respects to the description thereof contained in the
Prospectuses; the outstanding shares of Ordinary Shares have been duly and
validly authorized and issued and are fully paid and nonassessable; the
U.S. Securities being sold hereunder have been duly and validly authorized,
and, when issued and delivered to and paid for by the U.S. Underwriters
pursuant to this Agreement, will be fully paid and nonassessable; the U.S.
Securities have been duly authorized for listing, subject to official
notice of issuance on the American Stock Exchange; the certificates for the
U.S. Securities are in valid and sufficient form; the holders of
outstanding shares of Ordinary Shares of the Company are not entitled to
preemptive or other rights to subscribe for the U.S. Securities; and,
except as set forth in the Prospectuses, no options, warrants or other
rights to purchase, agreements or other obligations to issue, or rights to
convert any obligations into or exchange any securities for, shares of
Ordinary Shares of or ownership interests in the Company are outstanding.
(vi) There is no franchise, contract or other document of a
character required to be described in the Registration Statement or
Prospectuses, or to be filed as an exhibit thereto, which is not described
or filed as required; and the statements in the Prospectuses under the
heading "Taxation", and the summaries of legal and regulatory matters and
proceedings under the headings "Republic of Bolivia," "Description of
Ordinary Shares" and "Title and Ownership Rights" (under both of the
"Development Project" and "Advanced Exploration Properties" headings)
fairly summarize the matters therein described.
(vii) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation of
the Company enforceable in accordance with its terms.
(viii) The Company is not and, after giving effect to the
offering and sale of the Securities and the application of the proceeds
thereof as described in the Prospectuses, will not be an "investment
company" as defined in the Investment Company Act of 1940, as amended.
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(ix) No consent, approval, authorization, filing with or order
of any court or governmental agency or body is required in connection with
the transactions contemplated herein, except such as have been obtained
under the Act and such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the
Securities by the Underwriters in the manner contemplated herein and in the
Prospectuses.
(x) Neither the issue and sale of the Securities nor the
consummation of any other of the transactions herein contemplated nor the
fulfillment of the terms hereof will conflict with, result in a breach or
violation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to,
(i) the charter or by-laws of the Company or any of its subsidiaries or
(ii) the terms of any indenture, contract, lease, mortgage, deed of trust,
note agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument to which the Company or any of its subsidiaries is a
party or bound or to which their respective property is subject, or (iii)
any statute, law, rule, regulation, judgment, order or decree applicable to
the Company or any of its subsidiaries of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority
having jurisdiction over the Company or any of its subsidiaries or any of
their respective properties, which breach, violation or imposition would
individually or in the aggregate have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole.
(xi) Except as set forth in the Prospectuses, no holders of
securities of the Company have rights to the registration of such
securities under the Securities Act.
(xii) The consolidated financial statements and schedules of
the Company and its consolidated subsidiaries included in the Prospectuses
and the Registration Statement present fairly in all material respects the
financial condition, results of operations and cash flows of the Company as
of the dates and for the periods indicated, comply as to form with the
applicable accounting requirements of the Act and the rules and regulations
thereunder and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as otherwise noted therein). The selected financial data
set forth under the caption "Selected Consolidated Financial Data" in the
Prospectuses and Registration Statement fairly present, on the basis stated
in the Prospectuses and the Registration Statement, the information
included therein.
(xiii) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries or their property is pending or
threatened that (i) could reasonably be expected to have a material adverse
effect on the performance of this Agreement or the consummation of any of
the transactions contemplated hereby or (ii) could reasonably be expected
to have a material adverse change in the condition (financial or
otherwise), prospects, earnings, business or properties of the Company and
its subsidiaries, taken as a whole, whether or not arising from
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transactions in the ordinary course of business, except as set forth in or
contemplated in the Prospectuses (exclusive of any supplement thereto)
(except, in the case of this clause (ii), for those that have been
disclosed in the Prospectuses).
(xiv) Except as set forth in the Prospectuses, each of the
Company and each of its subsidiaries, owns or leases all such properties as
are necessary to the conduct of its operations as presently conducted and
each of the Company and each of its subsidiaries owns, leases or possesses
the rights to all properties as are necessary to explore, develop and
exploit the San Cristobal Project (as defined in the Prospectuses) in
Bolivia, except where the failure to own, lease or possess the rights for
any property would not singularly or in the aggregate have a material
adverse effect on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and its subsidiaries, taken
as a whole.
(xv) Except as set forth in the Prospectuses, neither the
Company nor any subsidiary is in violation of any law, rule or regulation
of any foreign national, federal, state or local governmental or regulatory
authority applicable to it or is not in non-compliance with any term or
condition of, or has failed to obtain and maintain in effect, any license,
certificate, permit, registration, concession, franchise, or other
governmental authorization required for the ownership or lease of its
property or the conduct of its business, which violation, non-compliance or
failure would individually or in the aggregate have a material adverse
effect on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectuses; and
the Company has not received notice of any proceedings relating to the
revocation or material modification of any such license, certificate,
permit or other authorization.
(xvi) Neither the Company nor any subsidiary is in violation or
default of (i) any provision of its charter or bylaws, (ii) the terms of
any indenture, contract, lease, mortgage, deed of trust, note agreement,
loan agreement or other agreement, obligation, condition, covenant or
instrument to which it is a party or bound or to which its property is
subject, or (iii) any statute, law, rule, regulation, judgment, order or
decree of any court, regulatory body, administrative agency, governmental
body, arbitrator or other authority having jurisdiction over the Company or
such subsidiary or any of its properties, as applicable, which violation or
default would individually or in the aggregate have a material adverse
effect on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its subsidiaries, taken as a
whole.
(xvii) Price Waterhouse LLP, who have certified certain
financial statements of the Company and its consolidated subsidiaries and
delivered their report with respect to the audited consolidated financial
statements and schedules included in the Prospectuses, are independent
public accountants with respect to the Company within the meaning of the
Act and the applicable published rules and regulations thereunder.
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(xviii) There are no transfer taxes or other similar fees or
charges under foreign national law, federal law or the laws of any state,
or any political subdivision thereof, required to be paid in connection
with the execution and delivery of this Agreement or the issuance by the
Company or sale by the Company of the Securities, except as set forth in
the Prospectuses or where the failure to pay any such taxes, fees or
charges would not individually or in the aggregate have a material adverse
effect on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its subsidiaries, taken as a
whole.
(xix) The Company has filed all foreign, federal, state and
local tax returns that are required to be filed or has requested extensions
thereof (except in any case in which the failure so to file would not have
a material adverse change in the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business, except as set forth in or contemplated in
the Prospectuses and has paid all taxes required to be paid by it and any
other assessment, fine or penalty levied against it, to the extent that any
of the foregoing is due and payable, except for any such assessment, fine
or penalty that is currently being contested in good faith or as described
in or as would not have a material adverse change in the condition
(financial or otherwise), prospects, earnings, business or properties of
the Company and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, except as set forth
in or contemplated in the Prospectuses.
(xx) Except as set forth in the Prospectuses, no labor
dispute with the employees of the Company or any of its subsidiaries exists
or is threatened or imminent that could result in a material adverse change
in the condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole, whether
or not arising from transactions in the ordinary course of business, except
as set forth in or contemplated in the Prospectuses.
(xxi) The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the businesses in
which they are engaged; neither the Company nor any such subsidiary has
been refused any insurance coverage sought or applied for; and neither the
Company nor any such subsidiary has any reason to believe that it will not
be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not have a material
adverse change in the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and its subsidiaries, taken
as a whole, whether or not arising from transactions in the ordinary course
of business, except as set forth in or contemplated in the Prospectuses.
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(xxii) No subsidiary of the Company is currently prohibited,
directly or indirectly, from paying any dividends to the Company, from
making any other distribution on such subsidiary's capital stock, from
repaying to the Company any loans or advances to such subsidiary from the
Company or from transferring any of such subsidiary's property or assets to
the Company or any other subsidiary of the Company, except as described in
or contemplated by the Prospectuses.
(xxiii) The Company and its subsidiaries possess all
certificates, authorizations, registrations, qualifications, licenses,
concessions, franchises and permits issued by the appropriate federal,
state, foreign national or local regulatory authorities necessary to
conduct their respective businesses, and neither the Company nor any such
subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization,
registration, qualification, license, concession, franchise or permit
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would result in a material adverse change in
the condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole, whether
or not arising from transactions in the ordinary course of business, except
as set forth in or contemplated in the Prospectuses.
(xxiv) Neither the Company nor any of its subsidiaries is in
violation of any federal, state, foreign national or local law or
regulation relating to occupational safety and health or to the storage,
handling or transportation of hazardous or toxic materials and the Company
and its subsidiaries have received all permits, licenses or other approvals
required of them under applicable federal, state, foreign national and
local occupational safety and health and environmental laws and regulations
to conduct their respective businesses, and the Company and each such
subsidiary is in compliance with all terms and conditions of any such
permit, license or approval, except any such violation of law or
regulation, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such
permits, licenses or approvals which would not, singly or in the aggregate,
result in a material adverse change in the condition (financial or
otherwise), prospects, earnings, business or properties of the Company and
its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated in the Prospectuses.
(xxv) The Company and each of its subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.
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(xxvi) The subsidiaries listed on Annex A attached hereto are
the only significant subsidiaries of the Company as defined by Rule 1-02 of
Regulation S-X.
(xxvii) The Company's independent technical consultants Kvaerner
Metals, Davy Nonferrous Division, Mine Reserves Associates Inc., Pincock,
Allen & Holt, Mineral Resources Development Inc., Knight Piesold LLC and
Behre Dolbear who have affirmed and verified the proven and probable ore
reserves located at the San Cristobal Project as of __________, 1997 and as
set forth in or incorporated by reference in the Prospectuses are experts
(as such term is used in Section 11 (b) (3) of the Act) in the field of
mining engineering and have consented to being named in the Registration
Statement.
(xxviii) The information set forth in the Registration Statement
and the Prospectuses relating to the proven and probable ore reserves
located at the San Cristobal Project as of __________, 1997 has been
prepared by the Company, Kvaerner Metals, Davy Nonferrous Division, Mine
Reserves Associates Inc., Pincock, Allen & Holt, Mineral Resources
Development Inc., Knight Piesold LLC and Behre Dolbear, respectively,
materially in accordance with methods generally applied in the mining
industry and conforms in all material respects to the rules and regulations
of the Commission.
(xxix) No stamp or other issuance or transfer taxes or duties
and no capital gains, income, withholding or other taxes are payable by or
on behalf of the several Underwriters or International Underwriters to the
Cayman Islands or any political subdivision or taxing authority thereof or
therein purely as a direct consequence of the issue of Securities by the
Company to or for the respective accounts of the several Underwriters and
International Underwriters, in each case for resale and delivery to the
initial purchasers thereof in the manner contemplated herein and in the
International Underwriting Agreement.
(xxx) The Shareholders' Agreements dated July, 1996 by and
among the Company, Apex Silver Mines LDC, Consolidated Commodities Ltd.,
Mr. Thomas S. Kaplan, Litani Capital Management LDC, Silver Holdings LDC
and each shareholder a signatory thereto have been duly authorized,
executed and delivered and are valid and binding obligations enforceable,
against the parties thereto, including, without limitation, the "Holdback"
provisions of Section 7 thereto.
Any certificate signed by any director of the Company and any
executive officer of Apex Corporation and delivered to the U.S. Representatives
or counsel for the U.S. Underwriters in connection with the offering of the
Securities shall be deemed a representation and warranty by the Company, as to
matters covered thereby, to each U.S. Underwriter.
2. Purchase and Sale. (a) Subject to the terms and conditions
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and in reliance upon the representations and warranties herein set forth, the
Company agrees, to sell to each U.S. Underwriter, and each U.S. Underwriter
agrees, severally and not jointly, to purchase from the
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Company, at a purchase price of $_______________ per share, the amount of the
U.S. Underwritten Securities set forth opposite such U.S. Underwriter's name in
Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants an
option to the several U.S. Underwriters to purchase, severally and not jointly,
up to ____________ shares of the U.S. Option Securities at the same purchase
price per share as the U.S. Underwriters shall pay for the U.S. Underwritten
Securities. Said option may be exercised only to cover over-allotments in the
sale of the U.S. Underwritten Securities by the U.S. Underwriters. Said option
may be exercised in whole or in part at any time (but not more than once) on or
before the 30th day after the date of the U.S. Prospectus upon written or
facsimile notice by the U.S. Representatives to the Company setting forth the
number of shares of the U.S. Option Securities as to which the several U.S.
Underwriters are exercising the option and the settlement date. Delivery of
certificates for the shares of U.S. Option Securities by the Company, and
payment therefor to the Company, shall be made as provided in Section 3 hereof.
The number of shares of the U.S. Option Securities to be purchased by each U.S.
Underwriter shall be the same percentage of the total number of shares of the
U.S. Option Securities to be purchased by the several U.S. Underwriters as such
U.S. Underwriter is purchasing of the U.S. Underwritten Securities, subject to
such adjustments as you in your absolute discretion shall make to eliminate any
fractional shares.
3. Delivery and Payment. Delivery of and payment for the U.S.
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Underwritten Securities and the U.S. Option Securities (if the option provided
for in Section 2(b) hereof shall have been exercised on or before the second
Business Day prior to the Closing Date) shall be made at 10:00 AM, New York City
time, on ________________________________, 1997, or at such time on such later
date not more than two Business Days after the foregoing date as the U.S.
Representatives and the International Representatives shall designate, which
date and time may be postponed by agreement among the U.S. Representatives, the
International Representatives and the Company or as provided in Section 9 hereof
(such date and time of delivery and payment for the U.S. Securities being herein
called the "Closing Date"). Delivery of the U.S. Securities shall be made to
the U.S. Representatives for the respective accounts of the several U.S.
Underwriters against payment by the several U.S. Underwriters through the U.S.
Representatives of the respective aggregate purchase prices of the U.S.
Securities being sold by the Company to or upon the order of the Company by wire
transfer payable in same-day funds to an account specified by the Company.
Delivery of the U.S. Underwritten Securities and the U.S. Option Securities
shall be made through the facilities of The Depository Trust Company unless the
U.S. Representatives shall otherwise instruct.
If the option provided for in Section 2(b) hereof is exercised
after the second business day prior to the Closing Date, the Company will
deliver the U.S. Option Securities (at the expense of the Company) to the U.S.
Representatives, at Seven World Trade Center, New York, New York, on the date
specified by the U.S. Representatives (which shall be within two Business Days
after exercise of said option), certificates for the U.S. Option Securities in
such names and denominations as the U.S. Representatives shall have requested
for the respective accounts of the several U.S. Underwriters, against payment by
the several U.S. Underwriters through the U.S. Representatives
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of the purchase price thereof to or upon the order of the Company by wire
transfer payable in same-day funds to an account specified by the Company. If
settlement for the U.S. Option Securities occurs after the Closing Date, the
Company will deliver to the U.S. Representatives on the settlement date for the
U.S. Option Securities, and the obligation of the U.S. Underwriters to purchase
the U.S. Option Securities shall be conditioned upon receipt of, supplemental
opinions, certificates and letters confirming as of such date the opinions,
certificates and letters delivered on the Closing Date pursuant to Section 6
hereof.
It is understood and agreed that the Closing Date shall occur
simultaneously with the "Closing Date" under the International Underwriting
Agreement, and that the settlement date, if any, shall occur simultaneously with
the "settlement date" under the International Underwriting Agreement.
4. Offering by Underwriters. It is understood that the
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several U.S. Underwriters propose to offer the U.S. Securities for sale to the
public as set forth in the U.S. Prospectus.
5. Agreements.
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(a) The Company agrees with the several U.S. Underwriters that:
(i) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective. Prior to the termination of the
offering of the Securities, the Company will not file any amendment of the
Registration Statement or supplement to the Prospectuses or any Rule 462(b)
Registration Statement unless the Company has furnished you a copy for your
review prior to filing and will not file any such proposed amendment or
supplement to which you reasonably object. Subject to the foregoing
sentence, if the Registration Statement has become or becomes effective
pursuant to Rule 430A, or filing of the Prospectuses is otherwise required
under Rule 424(b), the Company will cause the Prospectuses, properly
completed, and any supplement thereto to be filed with the Commission
pursuant to the applicable paragraph of Rule 424(b) within the time period
prescribed and will provide evidence satisfactory to the U.S.
Representatives of such timely filing. The Company will promptly advise
the U.S. Representatives (A) when the Registration Statement, if not
effective at the Execution Time, shall have become effective, (B) when the
Prospectuses, and any supplement thereto, shall have been filed (if
required) with the Commission pursuant to Rule 424(b) or when any Rule
462(b) Registration Statement shall have been filed with the Commission,
(C) when, prior to termination of the offering of the Securities, any
amendment to the Registration Statement shall have been filed or become
effective, (D) of any request by the Commission or its staff for any
amendment of the Registration Statement, or any Rule 462(b) Registration
Statement, or for any supplement to the Prospectuses or of any additional
information, (E) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (F) of
the receipt by the Company of any notification with
-11-
respect to the suspension of the qualification of the Securities for sale
in any jurisdiction or the initiation or threatening of any proceeding for
such purpose. The Company will use its best efforts to prevent the issuance
of any such stop order or the suspension of any such qualification and, if
issued, to obtain as soon as possible the withdrawal thereof.
(ii) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event occurs as a
result of which either of the Prospectuses as then supplemented would
include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it shall be
necessary to amend the Registration Statement or supplement either of the
Prospectuses to comply with the Act or the rules thereunder, the Company
promptly will (i) prepare and file with the Commission, subject to the
second sentence of paragraph (a) of this Section 5, an amendment or
supplement which will correct such statement or omission or effect such
compliance and (ii) supply any supplemented Prospectuses to you in such
quantities as you may reasonably request.
(iii) As soon as practicable, the Company will make generally
available to its security holders and to the U.S. Representatives an
earnings statement or statements of the Company and its subsidiaries which
will satisfy the provisions of Section 11(a) of the Act and Rule 158 under
the Act.
(iv) The Company will furnish to the U.S. Representatives and
counsel for the U.S. Underwriters, without charge, four (4) signed copies
of the Registration Statement (including exhibits thereto) and to each
other U.S. Underwriter a copy of the Registration Statement (without
exhibits thereto) and, so long as delivery of a prospectus by an U.S.
Underwriter or dealer may be required by the Act or otherwise required, as
many copies of each U.S. Preliminary Prospectus and the U.S. Prospectus and
any supplement thereto as the U.S. Representatives may reasonably request.
The Company will pay the expenses of printing or other production of all
documents relating to the offering.
(v) The Company will cooperate with the U.S. Representatives
and counsel for the U.S. Representatives in connection with endeavoring to
obtain qualification of the Securities for sale under the laws of such
jurisdictions as the U.S. Representatives may designate, will maintain such
qualifications in effect so long as required for the distribution of the
U.S. Securities and will pay any fee of the National Association of
Securities Dealers, Inc., in connection with its review of the offering;
provided, however, that the Company shall not be required to file any
general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it is
not otherwise so subject.
(vi) The Company will not, for a period of 180 days following
the Execution Time, without the prior written consent of Salomon Brothers
Inc, offer, sell or
-12-
contract to sell, or otherwise dispose of (or enter into any
transaction which is designed to, or could be expected to, result in the
disposition (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise) by the Company or any
affiliate of the Company or any person in privity with the Company or any
affiliate of the Company) directly or indirectly, or announce the offering
of, any other shares of Ordinary Shares or any securities convertible into,
or exchangeable for, shares of Ordinary Shares; provided, however, that the
-------- -------
Company may issue and sell Ordinary Shares pursuant to any employee or
director stock option plan, stock ownership plan or dividend reinvestment
plan of the Company in effect at the Execution Time and described in the
Prospectuses; and the Company may issue Ordinary Shares issuable upon the
conversion of securities or the exercise of warrants outstanding at the
Execution Time or pursuant to the Buy-Sell Agreement as disclosed in the
Prospectuses.
(b) Each U.S. Underwriter agrees that (i) it is not purchasing any of
the U.S. Securities for the account of anyone other than a United States or
Canadian Person, (ii) it has not offered or sold, and will not offer or sell,
directly or indirectly, any of the U.S. Securities or distribute any U.S.
Prospectus to any person outside the United States or Canada, or to anyone other
than a United States or Canadian Person, and (iii) any dealer to whom it may
sell any of the U.S. Securities will represent that it is not purchasing for the
account of anyone other than a United States or Canadian Person and agree that
it will not offer or resell, directly or indirectly, any of the U.S. Securities
outside the United States or Canada, or to anyone other than a United States or
Canadian Person or to any other dealer who does not so represent and agree;
provided, however, that the foregoing shall not restrict (A) purchases and sales
- -------- -------
between the International Underwriters on the one hand and the U.S. Underwriters
on the other hand pursuant to the Agreement Between U.S. Underwriters and
International Underwriters, (B) stabilization transactions contemplated under
the Agreement Between U.S. Underwriters and International Underwriters,
conducted through Salomon Brothers Inc (or through the U.S. Representatives and
International Representatives) as part of the distribution of the Securities,
and (C) sales to or through (or distributions of U.S. Prospectuses or U.S.
Preliminary Prospectuses to) United States or Canadian Persons who are
investment advisors, or who otherwise exercise investment discretion, and who
are purchasing for the account of anyone other than a United States or Canadian
Person.
(c) The agreements of the U.S. Underwriters set forth in paragraph (b)
of this Section 5 shall terminate upon the earlier of the following events:
(i) a mutual agreement of the U.S. Representatives and the
International Representatives to terminate the selling restrictions set
forth in paragraph (b) of this Section 5 and in Section 5(b) of the
International Underwriting Agreement; or
(ii) the expiration of a period of 30 days after the Closing
Date, unless (A) the International Representatives shall have given notice
to the Company and the Representatives that the distribution of the
International Securities by the International Underwriters has not yet been
completed, or (B) the Representatives shall have given notice
-13-
to the Company and the International Underwriters that the distribution of
the U.S. Securities by the U.S. Underwriters has not yet been completed. If
such notice by the Representatives or the International Representatives is
given, the agreements set forth in such paragraph (b) shall survive until
the earlier of (1) the event referred to in clause (i) of this subsection
(c) or (2) the expiration of an additional period of 30 days from the date
of any such notice.
6. Conditions to the Obligations of the U.S. Underwriters. The
-------------------------------------------------------
obligations of the U.S. Underwriters to purchase the U.S. Underwritten
Securities and the U.S. Option Securities, as the case may be, shall be subject
to the accuracy of the representations and warranties on the part of the Company
contained herein as of the Execution Time, the Closing Date and any settlement
date pursuant to Section 3 hereof, to the accuracy of the statements of the
Company made in any certificates pursuant to the provisions hereof, to the
performance by the Company of its obligations hereunder and to the following
additional conditions:
(a) If the Registration Statement has not become effective prior to
the Execution Time, unless the U.S. Representatives and the International
Representatives agree in writing to a later time, the Registration Statement
will become effective not later than (i) 6:00 PM New York City time on the date
of determination of the public offering price, if such determination occurred at
or prior to 3:00 PM New York City time on such date or (ii) 9:30 AM on the
Business Day following the day on which the public offering price was
determined, if such determination occurred after 3:00 PM New York City time on
such date; if filing of either of the Prospectuses, or any supplement thereto,
is required pursuant to Rule 424(b), the Prospectuses, and any such supplement,
will be filed in the manner and within the time period required by Rule 424(b);
and no stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have been
instituted or threatened.
(b) The Company shall have furnished to the U.S. Representatives the
opinion of W.S. Walker & Company, Cayman Islands counsel for the Company, dated
the Closing Date, to the effect that:
(i) each of the Company and its subsidiaries (individually a
"Subsidiary" and collectively the "Subsidiaries") has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or organized,
with full corporate power and authority to own its properties and conduct
its business as described in the Prospectuses, and is duly qualified to do
business as a foreign corporation and is in good standing under the laws of
each jurisdiction which requires such qualification, except where such
breach, violation or imposition would not individually or in the aggregate
have a material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole;
(ii) all the outstanding shares of capital stock of each
Significant Subsidiary have been duly and validly authorized and issued and
are fully paid and nonassessable, and,
-14-
except as otherwise set forth in the Prospectuses, all outstanding shares
of capital stock of the Subsidiaries are owned, directly or indirectly, by
the Company free and clear of any perfected security interest and, to the
knowledge of such counsel, after due inquiry, any other security interests,
claims, liens or encumbrances;
(iii) the outstanding shares of Ordinary Shares have been duly
and validly authorized and issued and are fully paid and nonassessable; the
Securities being sold hereunder by the Company have been duly and validly
authorized, and, when issued and delivered to and paid for by the U.S.
Underwriters pursuant to this Agreement and by the International
Underwriters pursuant to the International Underwriting Agreement, will be
fully paid and nonassessable; the certificates for the Securities are in
valid and sufficient form; and the holders of outstanding shares of capital
stock of the Company are not entitled to preemptive or other rights to
subscribe for the Securities;
(iv) to the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries of a character required to be disclosed
in the Registration Statement which is not adequately disclosed in the
Prospectuses, and there is no franchise, contract or other document of a
character required to be described in the Registration Statement or
Prospectuses, or to be filed as an exhibit thereto, which is not described
or filed as required; and the summaries of legal and regulatory matters and
proceedings under the heading "Description of Ordinary Shares" fairly
summarize the matters therein described;
(v) neither the issue and sale of the Securities, nor the
consummation of any other of the transactions contemplated herein or in the
International Underwriting Agreement nor the fulfillment of the terms
hereof will conflict with, result in a breach or violation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company
or its subsidiaries pursuant to, (i) the charter or by-laws of the Company
or its subsidiaries or (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument to which the Company or its
subsidiaries is a party or bound or to which their respective property is
subject, or (iii) any statute, law, rule, regulation, judgment, order or
decree applicable to the Company or its subsidiaries of any court,
regulatory body, administrative agency, governmental body, arbitrator or
other authority having jurisdiction over the Company or its subsidiaries or
any of its or their respective properties, except where such breach,
violation or imposition would not individually or in the aggregate have a
material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole;
(vi) the Company's agreement to the choice of law provisions set
forth in Section 14 hereof and in Section 15 of the International
Underwriting Agreement will be recognized by the courts of the Cayman
Islands; the Company can sue and be sued in its own
-15-
name under the laws of the Cayman Islands, the irrevocable submission of
the Company to the non-exclusive personal jurisdiction of a New York Court,
the waiver by the Company of any objection to the venue of a proceeding of
a New York Court and the agreement of the Company that this Agreement shall
be governed by and construed in accordance with the laws of the State of
New York are legal, valid and binding; and judgment obtained in a New York
Court arising out of or in relation to the obligations of the Company under
this Agreement and the International Underwriting Agreement, not being a
sum payable in respect of taxes or other charges of a like nature or a fine
or other penalty, is enforceable against the Company in the courts of the
Cayman Islands; and
(vii) The Company is not entitled to any immunity on the basis of
sovereignty or otherwise in respect of its obligations under this Agreement
or the International Underwriting Agreement and could not successfully
interpose any such immunity as a defense in any suit or action brought or
maintained in respect of its obligations under this Agreement or the
International Underwriting Agreement.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the laws of the
Cayman Islands, to the extent they deem proper and specified in such opinion,
upon the opinion of other counsel of good standing whom they believe to be
reliable and who are satisfactory to counsel for the U.S. Underwriters and (B)
as to matters of fact, to the extent they deem proper, on certificates of
responsible officers of the Company and public officials. Reference to the
Prospectuses in this paragraph (b) include any supplements thereto at the
Closing Date.
(c) The Company shall have furnished to the U.S. Representatives the
opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel for the Company,
dated the Closing Date, to the effect that:
(i) each of the Company and its subsidiaries incorporated in
the United States (individually a "Domestic Subsidiary" and collectively
the "Domestic Subsidiaries") has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized, with full corporate
power and authority to own its properties and conduct its business as
described in the Prospectuses, and is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each
jurisdiction which requires such qualification, except where such breach,
violation or imposition would not individually or in the aggregate have a
material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole;
(ii) all the outstanding shares of capital stock of each
Domestic Subsidiary have been duly and validly authorized and issued and
are fully paid and nonassessable, and, except as otherwise set forth in the
Prospectuses, all outstanding shares of Ordinary Shares of the Domestic
Subsidiaries are owned by the Company, directly or indirectly, free and
clear
-16-
of any perfected security interest and, to the knowledge of such counsel,
after due inquiry, any other security interests, claims, liens or
encumbrances;
(iii) the Company's authorized equity capitalization is as set
forth in the Prospectuses; the Ordinary Shares of the Company conform in
all material respects to the description thereof contained in the
Prospectuses; the Securities being sold hereunder by the Company are duly
authorized for listing, subject to official notice of issuance, on the
American Stock Exchange; and, except as set forth in the Prospectuses, to
such counsel's knowledge, no options, warrants or other rights to purchase,
agreements or other obligations to issue, or rights to convert any
obligations into or exchange any securities for, shares of Ordinary Shares
or ownership interests in the Company are outstanding;
(iv) to the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries of a character required to be disclosed
in the Registration Statement which is not adequately disclosed in the
Prospectuses, and there is no franchise, contract or other document of a
character required to be described in the Registration Statement or
Prospectuses, or to be filed as an exhibit thereto, which is not described
or filed as required; the descriptions contained in the Prospectuses under
the heading "Taxation" constitute fair summaries of those statues and
regulations discussed therein applicable to the offering of the U.S.
Securities;
(v) the Registration Statement has become effective under the
Act; any required filing of the Prospectuses, and any supplements thereto,
pursuant to Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b); to the knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement has been
issued, no proceedings for that purpose have been instituted or threatened
and the Registration Statement and each of the Prospectuses (other than the
financial statements and other financial information contained therein, as
to which such counsel need not express any opinion) comply as to form in
all material respects with the applicable requirements of the Act and the
rules thereunder; and such counsel has no reason to believe that on the
Effective Date or at the Execution Time the Registration Statement contains
or contained any untrue statement of a material fact or omitted or omits to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Prospectuses as of their
date and on the Closing Date include any untrue statement of a material
fact or omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (in each case, other than the financial statements and
other financial information contained therein, as to which such counsel
need not express any opinion);
(vi) this Agreement and the International Underwriting Agreement
have been duly authorized, executed and delivered by the Company;
-17-
(vii) the Company is not and, after giving effect to the
offering and sale of the Securities and the application of the proceeds
thereof as described in the Prospectuses, will not be an "investment
company" as defined in the Investment Company Act of 1940, as amended;
(viii) no consent, approval, authorization, filing with or order
of any court or governmental agency or body is required in connection with
the transactions contemplated herein, except such as have been obtained
under the Act and such as may be required under the blue sky laws of any
jurisdiction (and the securities laws of any jurisdiction outside the
United States) in connection with the purchase and distribution of the
Securities by the U.S. Underwriters in the manner contemplated in this
Agreement and in the Prospectuses and such other approvals (specified in
such opinion) as have been obtained;
(ix) neither the issue and sale of the Securities, nor the
consummation of any other of the transactions contemplated herein or in the
International Underwriting Agreement nor the fulfillment of the terms
hereof will conflict with, result in a breach or violation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company
or its subsidiaries pursuant to, (i) the terms of any indenture, contract,
lease, mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which the
Company or its subsidiaries is a party or bound or to which their
respective property is subject, or (ii) any statute, law, rule, regulation,
judgment, order or decree applicable to the Company or its subsidiaries of
any court, regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the Company or its
subsidiaries or any of its or their respective properties, except where
such breach, violation or imposition would not individually or in the
aggregate have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company and
its subsidiaries, taken as a whole; and
(x) Except as set forth in the Prospectuses, no holders of
securities of the Company have rights to the registration of such
securities under the Securities Act.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State of
New York or the Federal laws of the United States, to the extent they deem
proper and specified in such opinion, upon the opinion of other counsel of good
standing whom they believe to be reliable and who are satisfactory to counsel
for the U.S. Underwriters and (B) as to matters of fact, to the extent they deem
proper, on certificates of responsible officers of the Company and public
officials. Reference to the Prospectuses in this paragraph (b) include any
supplements thereto at the Closing Date.
(d) The Company shall have furnished to the U.S. Representatives the
opinion of Quintanilla & Soria, Bolivian counsel for the Company, dated the
Closing Date, with respect to matters of title and to corporate status in
Bolivia and other related matters as the U.S. Representatives may reasonably
require.
-18-
(e) The Company shall have furnished to the U.S. Representatives the
opinion of Bufete Gutierrez-Falla, Honduran counsel for the Company, dated the
Closing Date, with respect to matters of title and to corporate status in
Honduras and other related matters as the U.S. Representatives may reasonably
require.
(f) The Company shall have furnished to the U.S. Representatives the
opinion of Rodriguez-Mariategui & Vidal, Peruvian counsel for the Company, dated
the Closing Date, with respect to matters of title and corporate status in Peru
and other related matters as the U.S. Representatives may reasonably require.
(g) The U.S. Representatives shall have received from Winston &
Strawn, counsel for the U.S. Underwriters, such opinion or opinions, dated the
Closing Date, with respect to the issuance and sale of the U.S. Securities, the
Registration Statement, the Prospectuses (together with any supplement thereto)
and other related matters as the U.S. Representatives may reasonably require,
and the Company shall have furnished to such counsel such documents as they
request for the purpose of enabling them to pass upon such matters.
(h) The Company shall have furnished to the U.S. Representatives a
certificate of the Company, signed by the Chairman of the Company and the Vice
President of Finance and Chief Financial Officer of Apex Corporation, dated the
Closing Date, to the effect that the signers of such certificate have carefully
examined the Registration Statement, the Prospectuses, any supplements to the
Prospectuses and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct on and as of the Closing Date with the same
effect as if made on the Closing Date and the Company has complied with all
the agreements and satisfied all the conditions on its part to be performed
or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose
have been instituted or, to the Company's knowledge, threatened; and
(iii) since the date of the most recent financial statements
included in the Prospectuses (exclusive of any supplement thereto), there
has been no material adverse change in the condition (financial or
otherwise), prospects, earnings, business or properties of the Company and
its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated in the Prospectuses (exclusive of any supplement thereto).
(i) At the Execution Time and at the Closing Date, Price Waterhouse,
LLP shall have furnished to the U.S. Representatives letters, dated respectively
as of the Execution Time and as of the Closing Date, in form and substance
satisfactory to the U.S. Representatives, confirming that
-19-
they are independent accountants within the meaning of the Act and the
applicable published rules and regulations thereunder and stating in effect
that:
(i) in their opinion the audited financial statements and
financial statement schedules included in the Registration Statement and
the Prospectuses and reported on by them comply in form in all material
respects with the applicable accounting requirements of the Act and the
related published rules and regulations;
(ii) on the basis of a reading of the latest unaudited financial
statements made available by the Company and its subsidiaries; their
limited review, in accordance with standards established under Statement on
Auditing Standards No. 71 of the unaudited interim financial information
for the nine month period ended September 30, 1997 and as at September 30,
1996; carrying out certain specified procedures (but not an examination in
accordance with generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the comments set
forth in such letter; a reading of the minutes of the meetings of the
stockholders, directors and audit committees of the Company and the
Subsidiaries; and inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the Company and its
subsidiaries as to transactions and events subsequent to December 31, 1996,
nothing came to their attention which caused them to believe that:
(1) any unaudited financial statements included in the
Registration Statement and the Prospectuses do not comply in form in
all material respects with applicable accounting requirements of the
Act and with the published rules and regulations of the Commission
with respect to registration statements on Form S-1; and said
unaudited financial statements are not in conformity with generally
accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included in
the Registration Statement and the Prospectuses;
(2) with respect to the period subsequent to September 30,
1997, there were any changes, at a specified date not more than five
days prior to the date of the letter, in the accumulated deficit of
the Company and its subsidiaries or capital stock of the Company or
decreases in the shareholders' equity of the Company as compared with
the amounts shown on the September 30, 1997, consolidated balance
sheet included in the Registration Statement and the Prospectuses, or
for the period from October 1, 1997 to such specified date there were
any decreases, as compared with the corresponding period in the
preceding year; in interest income or in total or per share amounts of
interest income of the Company and its subsidiaries, except in all
instances for changes or decreases set forth in such letter, in which
case the letter shall be accompanied by an explanation by the Company
as to the significance thereof unless said explanation is not deemed
necessary by the U.S. Representatives;
-20-
(3) the unaudited amounts of [describe the capsule
information and its location] do not agree with the amounts set forth
in the unaudited financial statements for the same periods or were not
determined on a basis substantially consistent with that of the
corresponding amounts in the audited financial statements included in
the Registration Statement and the Prospectuses;
(4) the information included in the Registration Statement
and Prospectuses in response to Regulation S-K, Item 301 (Selected
Financial Data), Item 302 (Supplementary Financial Information) and
Item 402 (Executive Compensation) is not in conformity with the
applicable disclosure requirements of Regulation S-K; and
(iii) they have performed certain other specified procedures as a
result of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting, financial
or statistical information derived from the general accounting records of
the Company and its subsidiaries) set forth in the Registration Statement
and the Prospectuses agrees with the accounting records of the Company and
its subsidiaries, excluding any questions of legal interpretation.
References to the Prospectuses in this paragraph (i) include any
supplement thereto at the date of the letter.
(j) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Prospectuses (exclusive of any supplement thereto),
there shall not have been (i) any change or decrease specified in the letter or
letters referred to in paragraph (i) of this Section 6 or (ii) any change, or
any development involving a prospective material change, in or affecting the
condition (financial or otherwise), earnings, business or properties of the
Company and its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated in the Prospectuses (exclusive of any supplement thereto) the
effect of which, in any case referred to in clause (i) or (ii) above, is, in the
sole judgment of the U.S. Representatives, so material and adverse as to make it
impractical or inadvisable to proceed with the offering or delivery of the U.S.
Securities as contemplated by the Registration Statement (exclusive of any
amendment thereof) and the Prospectuses (exclusive of any supplement thereto).
(k) On or prior to the Execution Time, the American Stock Exchange
shall have approved the U.S. Underwriters' participation in the distribution of
the U.S. Securities to be sold hereunder.
(l) At the Execution Time, the Company shall have furnished to the
U.S. Representatives a letter substantially in the form of Exhibit __ hereto
from each officer and director of the Company addressed to the U.S.
Representatives, in which each such person agrees not to offer, sell, contract
to sell, pledge or otherwise dispose of, or file a registration statement with
the
-21-
Commission in respect of, or establish or increase a put equivalent position
or liquidate or decrease a call equivalent position within the meaning of
Section 16 of the Exchange Act with respect to, any shares of Ordinary Shares of
the Company or any securities convertible into or exercisable or exchangeable
for such Ordinary Shares, or publicly announce an intention to effect any such
transaction, for a period of 180 days after the date of this Agreement, other
than (i) any shares of Ordinary Shares to be sold hereunder, (ii) any option or
warrant or the conversion of a security outstanding on the date hereof and
referred to in the Prospectus to which this Agreement relates and (iii) other
than shares of Ordinary Shares disposed of as bona fide gifts approved by
Salomon Brothers Inc.
(m) Prior to the Closing Date, the Company shall have furnished to the
U.S. Representatives such further information, certificates and documents as the
U.S. Representatives may reasonably request.
(n) The closing of the purchase of the International Underwritten
Securities to be issued and sold by the Company pursuant to the International
Underwriting Agreement shall occur concurrently with the closing described
herein.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the U.S. Representatives and counsel for the U.S. Underwriters,
this Agreement and all obligations of the U.S. Underwriters hereunder may be
canceled at, or at any time prior to, the Closing Date by the U.S.
Representatives. Notice of such cancellation shall be given to the Company in
writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be
delivered at the office of Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel
for the Company, at 590 Madison Avenue, New York, New York, on the Closing Date.
7. Reimbursement of U.S. Underwriters' Expenses. If the sale of the
---------------------------------------------
Securities provided for herein is not consummated because any condition to the
obligations of the U.S. Underwriters set forth in Section 6 hereof is not
satisfied, because of any termination pursuant to Section 10 hereof or because
of any refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the U.S. Underwriters, the Company will reimburse the U.S.
Underwriters severally through Salomon Brothers Inc on demand for all out-of-
pocket expenses (including reasonable fees and disbursements of counsel) that
shall have been incurred by them in connection with the proposed purchase and
sale of the U.S. Securities.
8. Indemnification and Contribution. (a) The Company agrees to
---------------------------------
indemnify and hold harmless each U.S. Underwriter, the directors, officers,
employees and agents of each U.S. Underwriter and each person who controls any
U.S. Underwriter within the meaning of either the Act
-22-
or the Exchange Act against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become subject under the Act,
the Exchange Act or other Federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement for the registration of the Securities as originally
filed or in any amendment thereof, or in any U.S. or International Preliminary
Prospectus or in either of the Prospectuses, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that (i) the
-------- -------
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of any U.S. Underwriter through the U.S.
Representatives specifically for inclusion therein, and (ii) such indemnity with
respect to any preliminary prospectus shall not inure to the benefit of any U.S.
Underwriter (or any person controlling such U.S. Underwriter) from whom the
person asserting such loss, claim, damage, or liability purchased the U.S.
Securities which are the subject thereof if such person did not receive a copy
of the U.S. Prospectus (as then amended or supplemented if the Company shall
have furnished any amendment or supplement thereto) at or prior to the
confirmation of the sale of such U.S. Securities to such person in any case
where such delivery is required by the Act and the untrue statement or omission
of a material fact contained in such preliminary prospectus was corrected in the
Prospectuses (as so amended or supplemented). This indemnity agreement will be
in addition to any liability which the Company may otherwise have.
(b) Each U.S. Underwriter severally agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers who signs the
Registration Statement, and each person who controls the Company within the
meaning of either the Act or the Exchange Act, to the same extent as the
foregoing indemnity to each U.S. Underwriter, but only with reference to written
information relating to such U.S. Underwriter furnished to the Company by or on
behalf of such U.S. Underwriter through the U.S. Representatives specifically
for inclusion in the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which any U.S.
Underwriter may otherwise have. The Company acknowledges that the statements
set forth in the last paragraph of the cover page regarding delivery of the U.S.
Securities, the stabilization legend in block capital letters on page (ii) and,
under the heading "Underwriting" [or "Plan of Distribution",] (i) the sentences
related to concessions and reallowances and (ii) the paragraph related to
stabilization in any U.S. or International Preliminary Prospectus and the
Prospectuses constitute the only information furnished in writing by or on
behalf of the several U.S. Underwriters for inclusion in any U.S. or
International Preliminary Prospectus or the Prospectuses.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be
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made against the indemnifying party under this Section 8, notify the
indemnifying party in writing of the commencement thereof; but the failure so to
notify the indemnifying party (i) will not relieve it from liability under
paragraph (a) or (b) above unless and to the extent it did not otherwise learn
of such action and such failure results in the forfeiture by the indemnifying
party of substantial rights and defenses and (ii) will not, in any event,
relieve the indemnifying party from any obligations to any indemnified party
other than pursuant to the indemnification obligation provided in paragraph (a)
or (b) above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
-------- -------
reasonably satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the right to employ
separate counsel (including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate counsel if (i) the
use of counsel chosen by the indemnifying party to represent the indemnified
party would present such counsel with a conflict of interest, (ii) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall not have
employed counsel reasonably satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after notice of the institution
of such action or (iv) the indemnifying party shall authorize the indemnified
party to employ separate counsel at the expense of the indemnifying party. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the U.S. Underwriters agree to
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating or
defending same) (collectively "Losses") to which the Company and one or more of
the U.S. Underwriters may be subject in such proportion as is appropriate to
reflect the relative benefits received by the Company and by the U.S.
Underwriters from the offering of the U.S. Securities; provided, however, that
-------- -------
in no case shall any U.S. Underwriter (except as may be provided in any
agreement among underwriters relating to the offering of the U.S. Securities) be
responsible for any amount in excess of the underwriting discount or commission
applicable to the Securities purchased by such U.S. Underwriter hereunder. If
the allocation provided by the immediately preceding sentence is unavailable for
any reason, the Company and the U.S. Underwriters shall contribute in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company and the U.S.
-24-
Underwriters in connection with the statements or omissions which resulted in
such Losses as well as any other relevant equitable considerations. Benefits
received by the Company shall be deemed to be equal to the total net proceeds
from the offering (before deducting expenses) received by it, and benefits
received by the U.S. Underwriters shall be deemed to be equal to the total
underwriting discounts and commissions, in each case as set forth on the cover
page of the U.S. Prospectus. Relative fault shall be determined by reference to,
among other things, whether any untrue or any alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information provided by the Company or the U.S. Underwriters, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The Company
and the U.S. Underwriters agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations referred
to above. Notwithstanding the provisions of this paragraph (d), no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person who
controls an U.S. Underwriter within the meaning of either the Act or the
Exchange Act and each director, officer, employee and agent of an U.S.
Underwriter shall have the same rights to contribution as such U.S. Underwriter,
and each person who controls the Company within the meaning of either the Act or
the Exchange Act, and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to the applicable terms and
conditions of this paragraph (d).
9. Default by an U.S. Underwriter. If any one or more U.S.
-------------------------------
Underwriters shall fail to purchase and pay for any of the U.S. Securities
agreed to be purchased by such U.S. Underwriter or U.S. Underwriters hereunder
and such failure to purchase shall constitute a default in the performance of
its or their obligations under this Agreement, the remaining U.S. Underwriters
shall be obligated severally to take up and pay for (in the respective
proportions which the amount of U.S. Securities set forth opposite their names
in Schedule I hereto bears to the aggregate amount of U.S. Securities set forth
opposite the names of all the remaining U.S. Underwriters) the U.S. Securities
which the defaulting U.S. Underwriter or U.S. Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of U.S.
-------- -------
Securities which the defaulting U.S. Underwriter or U.S. Underwriters agreed but
failed to purchase shall exceed 10% of the aggregate amount of U.S. Securities
set forth in Schedule I hereto, the remaining U.S. Underwriters shall have the
right to purchase all, but shall not be under any obligation to purchase any, of
the U.S. Securities, and if such nondefaulting U.S. Underwriters do not purchase
all the U.S. Securities, this Agreement will terminate without liability to any
nondefaulting U.S. Underwriter or the Company. In the event of a default by any
U.S. Underwriter as set forth in this Section 9, the Closing Date shall be
postponed for such period, not exceeding five Business Days, as the U.S.
Representatives shall determine in order that the required changes in the
Registration Statement and the Prospectuses or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall relieve
any defaulting U.S. Underwriter of its liability, if any, to the Company and any
nondefaulting U.S. Underwriter for damages occasioned by its default hereunder.
-25-
10. Termination. This Agreement shall be subject to termination in
------------
the absolute discretion of the U.S. Representatives, by notice given to the
Company prior to delivery of and payment for the U.S. Securities, if at any time
prior to such time (i) trading in the Company's Ordinary Shares shall have been
suspended by the Commission or the American Stock Exchange or trading in
securities generally on the New York Stock Exchange or the American Stock
Exchange shall have been suspended or limited or minimum prices shall have been
established on either of such Exchanges, (ii) a banking moratorium shall have
been declared either by Federal or New York State authorities or (iii) there
shall have occurred any outbreak or escalation of hostilities, declaration by
the United States of a national emergency or war or other calamity or crisis the
effect of which on financial markets is such as to make it, in the sole judgment
of the U.S. Representatives, impractical or inadvisable to proceed with the
offering or delivery of the Securities as contemplated by the U.S. Prospectus
(exclusive of any supplement thereto).
11. Representations and Indemnities to Survive. The respective
-------------------------------------------
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the U.S. Underwriters set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of any U.S. Underwriter, or the Company
or any of the officers, directors or controlling persons referred to in Section
8 hereof, and will survive delivery of and payment for the U.S. Securities. The
provisions of Sections 7 and 8 hereof shall survive the termination or
cancellation of this Agreement.
12. Notices. All communications hereunder will be in writing and
--------
effective only on receipt, and, if sent to the U.S. Representatives, will be
mailed, delivered or telefaxed to the Salomon Brothers Inc General Counsel (fax
no.: (212) 783-1752) and confirmed to the General Counsel, care of Salomon
Brothers Inc, at Seven World Trade Center, New York, New York, 10048, Attention:
General Counsel; or, if sent to the Company, will be mailed, delivered or
telefaxed to Thomas S. Kaplan (facsimile number___________________) and
confirmed to him at Apex Silver Mines Corporation, 1700 Lincoln Street, Suite
3050, Denver, Colorado 80203, attention of the Legal Department.
13. Successors. This Agreement will inure to the benefit of and be
-----------
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and construed
---------------
in accordance with the laws of the State of New York.
15. Counterparts. This Agreement may be signed in one or more
------------
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
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16. Headings. The section headings used herein are for convenience
---------
only and shall not affect the construction hereof.
17. Definitions. The terms which follow, when used in this
------------
Agreement, shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City.
"Effective Date" shall mean each date and time that the Registration
Statement, any post-effective amendment or amendments thereto and any Rule
462(b) Registration Statement became or become effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"International Preliminary Prospectus" shall have the meaning set
forth under "U.S. Preliminary Prospectus."
"Preliminary Prospectus" shall have the meaning set forth under "U.S.
Preliminary Prospectus."
"Prospectus" shall mean the prospectus relating to the Securities that
is first filed pursuant to Rule 424(b) after the Execution Time or, if no
filing pursuant to Rule 424(b) is required, shall mean the form of final
prospectus relating to the Securities included in the Registration
Statement at the Effective Date.
"Registration Statement" shall mean the registration statement
referred to in paragraph 1(a) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at the
Execution Time, in the form in which it shall become effective) and, in the
event any post-effective amendment thereto or any Rule 462(b) Registration
Statement becomes effective prior to the Closing Date (as hereinafter defined),
shall also mean such registration statement as so amended or such Rule 462(b)
Registration Statement, as the case may be. Such term shall include any Rule
430A Information deemed to be included therein at the Effective Date as provided
by Rule 430A.
"Rule 424", "Rule 430A" and "Rule 462" refer to such rules under the
Act.
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"Rule 430A Information" shall mean information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b) relating
to the offering covered by the initial registration statement.
"U.S. Preliminary Prospectus" and the "International Preliminary
Prospectus", respectively, shall mean any preliminary prospectus with
respect to the offering of the U.S. Securities and the International
Securities, as the case may be, referred to in paragraph (i) above and any
preliminary prospectus with respect to the offering of the U.S. Securities
and the International Securities, as the case may be, included in the
Registration Statement at the Effective Date that omits Rule 430A
Information; and the U.S. Preliminary Prospectus and the International
Preliminary Prospectus are hereinafter collectively called the "Preliminary
Prospectuses".
"United States or Canadian Person" shall mean any person who is a
national or resident of the United States or Canada, any corporation,
partnership, or other entity created or organized in or under the laws of
the United States or Canada or of any political subdivision thereof, or any
estate or trust the income of which is subject to United States or Canadian
Federal income taxation, regardless of its source (other than any non-
United States or non-Canadian branch of any United States or Canadian
Person), and shall include any United States or Canadian branch of a person
other than a United States or Canadian Person. "U.S." or "United States"
shall mean the United States of America (including the states thereof and
the District of Columbia), its territories, its possessions and other areas
subject to its jurisdiction.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several U.S. Underwriters.
Very truly yours,
Apex Silver Mines Limited
By
------------------------------
Chairman
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The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Brothers Inc
PaineWebber Incorporated
Scotia Capital Markets (USA) Inc.
Smith Barney Inc.
By: Salomon Brothers Inc
By:
-------------------------------------
Vice President
For themselves and the other
several U.S. Underwriters
named in Schedule I to the foregoing
Agreement.
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SCHEDULE I
----------
Number of Shares
to be
Underwriters Purchased
- ------------ ----------------
Salomon Brothers Inc..............
PaineWebber Incorporated..........
Scotia Capital Market (USA) Inc...
Smith Barney Inc..................
_______________
Total.............. 7,200,000
===============
-30-
EXHIBIT __
[Letterhead of officer or director of the Company]
Apex Silver Mines Limited
-------------------------
Public Offering of Ordinary Shares
----------------------------------
, 1997
------------
Salomon Brothers Inc
PaineWebber Incorporated
Scotia Capital Markets (USA) Inc.
Smith Barney Inc.
As U.S. Representatives of the several U.S. Underwriters,
c/o Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
This letter is being delivered to you in connection with the proposed
U.S. Underwriting Agreement (the "Underwriting Agreement"), between Apex Silver
Mines Limited, a Cayman Islands corporation (the "Company"), and each of you as
representatives of a group of Underwriters named therein, relating to an
underwritten public offering of Ordinary Shares, $.01 par value (the "Ordinary
Shares"), of the Company.
In order to induce you and the other U.S. Underwriters to enter into
the Underwriting Agreement, the undersigned will not, without the prior written
consent of Salomon Brothers Inc, offer, sell, contract to sell, pledge or
otherwise dispose of, or file a registration statement with the Commission in
respect of, or establish or increase a put equivalent position or liquidate or
decrease a call equivalent position within the meaning of Section 16 of the
Exchange Act with respect to, any shares of capital stock of the Company or any
securities convertible into or exercisable or exchangeable for such capital
stock, or publicly announce an intention to effect any such transaction, for a
period of 180 days after the date of this Agreement, other than (i) any shares
of Ordinary Shares to be sold hereunder, (ii) any option or warrant or the
conversion of a security outstanding on the date hereof and referred to in the
Prospectus to which this Agreement relates and (iii) shares of Ordinary Shares
disposed of as bona fide gifts approved by Salomon Brothers Inc.
If for any reason the Underwriting Agreement shall be terminated prior
to the Closing Date (as defined in the Underwriting Agreement), the agreement
set forth above shall likewise be terminated.
Yours very truly,
[Signature of officer or director]
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[Name and address of officer or director]
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