Exhibit 10.2
Form of Change of Control Agreement
Apex Silver Mines Limited has entered into a change of control
agreement with Xxxxxxx X. Xxxxxxxxx, its President and Chief Executive Officer,
effective October 11, 2003 pursuant to which he will receive certain benefits
upon his termination of employment or the occurrence of certain other events
following a Change of Control as defined in the agreement. These benefits
include a lump sum severance benefit equal to three times Xx. Xxxxxxxxx'x salary
plus target bonus in effect immediately prior to the occurrence of the event
giving rise to the benefit and continuation of medical, dental, disability, life
insurance and other benefits for a 36 month period.
Apex Silver Mines Limited also entered into a similar change of control
agreement with Xxxx X. Xxxxxxx, its Executive Vice President and Chief Operating
Officer, effective June 14, 2004 pursuant to which he will receive certain
benefits upon his termination of employment or on the occurrence of certain
other events following a Change of Control as defined in the agreement. These
benefits include a lump sum severance benefit equal to three times Mr. Edward's
salary plus target bonus in effect immediately prior to the occurrence of the
event giving rise to the benefit and continuation of medical, dental,
disability, life insurance and other benefits for a 36 month period.
The change of control agreements entered into by Xx. Xxxxxxxxx and Xx.
Xxxxxxx are identical to those previously entered into by Apex Silver Mines
Limited with certain of its officers or the officers of certain its
subsidiaries, with the exception of the multiple used to calculate the severance
benefit, the period during which benefits would continue, which terms are
negotiated with each officer, and certain nonmaterial conforming changes or
updates.
Name and Title
Apex Silver Mines Corporation
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Dear
Apex Silver Mines Limited (the "Company") considers it essential to the
best interests of its stockholders to xxxxxx the continuous employment of key
management personnel. In this connection, the Board of Directors of the Company
(the "Board") recognizes that, as is the case with many publicly held
corporations, the possibility of a Change of Control (as defined in Section 2
hereof) may exist and that such possibility, and the uncertainty and questions
which it may raise among management, may result in the departure or distraction
of management personnel to the detriment of the Company and its stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of the
Company's management, including yourself, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a Change of Control, although no such change is now contemplated.
In order to induce you to remain in the employ of the Company, the
Company agrees that you shall receive the severance benefits set forth in this
letter agreement (the "Agreement") in the event your employment with the Company
is terminated subsequent to a Change of Control under the circumstances
described below.
1. TERM OF AGREEMENT. This Agreement shall commence on your date of
employment and shall continue from year to year at the discretion of
the Board of Directors. This Agreement shall automatically terminate
upon the earlier to occur of (i) your termination of employment with
the Company, or (ii) the Company's furnishing you with notice of
termination of employment, irrespective of the effective date of such
termination.
2. CHANGE OF CONTROL. No benefits shall be payable hereunder unless there
shall have been a Change of Control, as set forth below. For purposes
of this Agreement, a "Change of Control" shall mean the first to occur
of the events specified in (A), (B), or (C), following, (but no event
other than the specified events) except as otherwise provided in (D),
following: (A) any person becomes the beneficial owner, directly or
indirectly of securities of Apex Silver Mines Limited representing
thirty-five percent (35%) or more of the combined voting power of the
Company's then outstanding voting securities other than any person who,
as of the date this policy is approved by the Board of Directors, is
the beneficial owner of at least 15% of the Company's outstanding
voting securities (determined in Accordance with Rule 13d under the
Securities and Exchange Act of 1934) or (B) three or more Directors of
the Company, whose election or nomination for election is not approved
by a majority of the applicable Incumbent Board, are elected within any
single twelve month period to serve on the Board; or (C) members of the
applicable Incumbent Board cease to constitute a majority of the Board.
(D) Notwithstanding the foregoing, a Change of Control shall not be
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deemed to occur solely because thirty-five percent (35%) or more of the
combined voting power of the Company's then outstanding voting
securities are acquired by one or more employee benefit plans
maintained by the Company. (E) For purposes of Section 2(A), the terms
"person" and "beneficial owner" shall have the meanings set forth in
Sections 2.4(a)(9) and 13(d) of the Securities Exchange Act of 1934, as
amended, and in the regulations promulgated thereunder. For purposes of
this Section 2 "Incumbent Board" means (i) members of the Board of
Directors of the Company on January 1, 1998, to the extent that they
continue to serve as members of the Board, and (ii) any individual who
becomes a member of the Board after January 1, 1998, if such
individuals election or nomination for election as a Director was
approved by a vote of at least seventy-five percent (75%) of the then
applicable Incumbent Board.
3. TERMINATION FOLLOWING CHANGE OF CONTROL. If the events described in
Section 2 hereof constituting a Change of Control shall have occurred, you shall
be entitled to the benefits provided in Subsection 4(iii) hereof upon the
subsequent termination of your employment during the term of this Agreement
unless such termination is (A) because of your death or Disability, (B) by the
Company for Cause, or (C) by you other than for Good Reason.
(i) Disability. If, as a result of your incapacity due to physical
or mental illness, you shall have been absent from the
full-time performance of your duties with the Company for six
consecutive months, and within 30 days after written notice of
termination is given you shall not have returned to the
full-time performance of your duties, your employment may be
terminated for "Disability."
(ii) Cause. Termination by the Company of your employment for
"Cause" shall mean termination for(A) the commission of a
felony or a crime involving moral turpitude or the commission
of any other act involving dishonesty, disloyalty, or fraud
with respect to the Company, (B) conduct tending to bring the
Company into substantial public disgrace or disrepute, (C)
substantial and repeated failure to perform duties as
reasonably directed by the Board, (D) gross negligence or
willful misconduct with respect to the Company or any of its
affiliated entities, or (E) any other material breach of any
other agreement between you and the Company or its affiliated
entities which is not cured within 15 days after written
notice thereof to you.
(iii) Good Reason. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean, without your express written
consent, the occurrence after a Change of Control of any of
the following circumstances unless, in the case of paragraphs
(A), (B), (E), (F), (G) or (H), such circumstances are fully
corrected prior to the Date of Termination specified in the
Notice of Termination, as such terms are defined in
Subsections 3(v) and 3(iv) hereof, respectively, given in
respect thereof:
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(A) the assignment to you of any duties inconsistent with
your current status as an executive of the Company or
a substantial adverse alteration in the nature or
status of your responsibilities from those in effect
immediately prior to the Change of Control;
(B) a reduction by the Company in your annual base salary
as in effect on the date hereof or as the same may be
increased from time to time, except for
across-the-board salary reductions similarly
affecting all senior executives of the Company and
all senior executives or any person in control of the
Company;
(C) your relocation to a location not within 25 miles of
your present office or job location, except for
required travel on the Company's business to an
extent substantially consistent with your present
business travel obligations;
(D) the failure by the Company, without your consent, to
pay to you any portion of your current compensation,
or to pay to you any portion of an installment of
deferred compensation under any deferred compensation
program of the Company, within seven days of the date
such compensation is due;
(E) the failure by the Company to continue in effect any
bonus to which you were entitled, or any compensation
plan in which you participated immediately prior to
the Change of Control which is material to your total
compensation, including but not limited to the
Company's Incentive Bonus Plan, Stock Option Plan,
401(k) Profit Sharing Plan, or any substitute plan or
plans adopted prior to the Change of Control, unless
an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with
respect to such plan and such equitable arrangement
provides substantially equivalent benefits not
materially less favorable to you (both in terms of
the amount of benefits provided and the level of your
participation relative to other participants), or the
failure by the Company to continue your participation
therein (or in such substitute or alternative plan)
on a basis not materially less favorable (both in
terms of the amount of benefits provided and the
level of your participation relative to other
participants) as existed at the time of the Change of
Control of the Company.
(F) the failure by the Company to continue to provide you
with benefits substantially similar to those enjoyed
by you under any of the Company's life insurance,
medical, dental, and accident, or disability plans in
which you were participating at the time of the
Change of Control, the taking of any action by the
Company which would directly or indirectly materially
reduce any of such benefits or deprive you of any
material fringe benefit enjoyed by you at the time of
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the Change of Control, or the failure by the Company
to provide you with the number of paid vacation days
to which you are entitled in accordance with the
Company's normal vacation policy in effect at the
time of the Change of Control;
(G) the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to
perform this Agreement, as contemplated in Section 5
hereof; or
(H) any purported termination of your employment which is
not effected pursuant to a Notice of Termination
satisfying the requirements of Subsection 3(iv)
hereof (and, if applicable, the requirements of
Subsection 3(ii) hereof); for purposes of this
Agreement, no such purported termination shall be
effective.
Your rights to terminate your employment pursuant to
this Subsection shall not be affected by your
incapacity due to physical or mental illness. Your
continued employment shall not constitute consent to,
or a waiver of rights with respect to, any
circumstance constituting Good Reason hereunder.
(iv) NOTICE OF TERMINATION. Any purported termination of your
employment by the Company or by you shall be communicated by
written Notice of Termination to the other party hereto in
accordance with Section 6 hereof. For purposes of this
agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so
indicated.
(v) DATE OF TERMINATION, ETC. "Date of Termination" shall mean (A)
if your employment is terminated for Disability, 30 days after
Notice of Termination is given (provided that you shall not
have returned to the full-time performance of your duties
during such 30-day period), and (B) if your employment is
terminated pursuant to Subsections 3(ii) or 3(iii) hereof or
for any other reason (other than Disability), the date
specified in the Notice of Termination (which, in the case of
a termination pursuant to Subsection 3(ii) hereof shall not be
less than 30 days, and in the case of a termination pursuant
to Subsection 3(iii) hereof shall not be less than 15 nor more
than 60 days, respectively, from the date such Notice of
Termination is given).
4. COMPENSATION UPON TERMINATION OR DURING DISABILITY. Following a
change of Control, as defined by Section 2 hereof, upon termination of your
employment or during a period of Disability you shall be entitled to the
following benefits:
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(i) During any period that you fail to perform your full-time
duties with the Company as a result of incapacity due to
physical or mental illness, you shall continue to receive your
base salary at the rate in effect at the commencement of any
such period, together with all amounts payable to you under
any compensation plan of the Company during such period, until
this Agreement is terminated pursuant to Subsection 3(i)
hereof. Thereafter, or in the event your employment shall be
terminated by you other than for Good Reason or by reason of
your death, your benefits shall be determined under the
Company's insurance or other compensation programs then in
effect in accordance with the terms of such programs.
(ii) If your employment shall be terminated by the Company for
Cause, Disability or death, or by you other than for Good
Reason, the Company shall pay you your full base salary
through the Date of Termination at the rate in effect at the
time Notice of Termination is given, plus all other amounts to
which you are entitled under any insurance and other
compensation programs of the Company at the time such payments
are due, and the Company shall have no further obligations to
you under this Agreement.
(iii) If your employment by the Company shall be terminated (a) by
the Company other than for Cause, Disability or death or (b)
by you for Good Reason, then you shall be entitled to the
benefits provided below:
(A) The Company shall pay you your full base salary
through the Date of Termination at the rate in effect
at the time Notice of Termination is given, plus all
other amounts to which you are entitled under any
compensation plan of the Company, at the time such
payments are due, except as otherwise provided below.
(B) In lieu of any further salary payments to you for
periods subsequent to the Date of Termination, the
Company shall pay as severance pay to you a lump sum
severance payment (together with the payments
provided in paragraph (C) of this Subsection 4(iii),
the "Severance Payments") equal t] times the sum of
your (a) annual base salary in effect immediately
prior to the occurrence of the circumstance giving
rise to the Notice of Termination given in respect
thereof, and (b) 100% of the Target Bonus Amount as
designated in Schedule One in Section 4 of the
Company's Incentive Bonus Plan times your annual base
salary in effect immediately prior to the occurrence
of the circumstance giving rise to the Notice of
Termination.
(C) The Company shall pay to you any deferred
compensation, including but not limited to deferred
bonuses, allocated or credited to you as of the Date
of Termination.
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(D) The Company shall also pay to you all legal fees and
expenses incurred by you as a result of such
termination including all such fees and expenses, if
any, incurred in contesting or disputing any such
termination or in seeking to obtain or enforce any
right or benefit provided by this Agreement.
(E) Taxes - All payments shall be subject to the
withholding of such amounts as the Company is
required to be withheld pursuant to any applicable
federal, state, or local law or regulation, and you
are responsible for any tax liability on such
payments.
(F) All payments under this letter of agreement and
benefits provided under the program will be
contingent upon the execution of an Application and
Release of Claims by you and the Company, and this
Application and Release of Claims shall govern the
timing of all payments made. A copy of the terms and
conditions of such Application and Release of Claims
is attached as an appendix to this Agreement.
(G) Limitation on Benefits. Any benefits payable or to be
provided pursuant to this Agreement or otherwise,
which constitute "Parachute Payments" as defined in
Section 280G(b)(2)(A)(i) of the Code, shall be
subject to limitation such that the benefits payable
or to be provided under this Agreement, as well as
any payments or benefits provided outside of this
Agreement, shall not cause the Company to have paid
an "Excess Parachute Payment" as defined in Section
280G(b)(1) of the Code. Accordingly, anything in this
Agreement to the contrary notwithstanding, in the
event that it is determined that receipt of all
Parachute Payments would cause the Company to pay an
Excess Parachute Payment, the Company shall
determine, and promptly notify you of, a "Reduced
Amount" which shall be the highest aggregate amount
of Parachute Payments that shall not cause the
Company to have paid an Excess Parachute Payment. You
may then elect, in your sole discretion, which and
how much of the Parachute Payments, including without
limitation Parachute Payments made outside of this
Agreement, shall be eliminated or reduced (as long as
after such election the "Present Value" (as defined
in Section 280G(d)(4) of the Code) of the aggregate
Parachute Payments is equal to the Reduced Amount,
and shall advise the Company in writing of such
election within 10 days of your receipt of notice. If
no such election is made within such 10 day period,
the Company may elect which of Parachute Payments,
including without limitation Parachute Payments made
outside of this Agreement, shall be eliminated or
reduced (as long as after such election the Present
Value of the aggregate Parachute Payments is equal to
the Reduced Amount) and shall notify you promptly of
such election.
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(iv) If your employment shall be terminated (A) by the Company
other than for Cause, Disability or death or (B) by you for
Good Reason, then for a [____]month period after such
termination, the Company shall arrange to provide you with
life, disability, accident, medical, and dental insurance
benefits substantially similar to those that you are receiving
immediately prior to the Notice of Termination. Benefits
otherwise receivable by you pursuant to this Subsection 4(iv)
shall be reduced to the extent comparable benefits are
actually received by you from another employer during the
[____]-month period following your termination, and any such
benefits actually received by you shall be reported to the
Company.
(v) You shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other
employment or otherwise, nor shall the amount of any payment
or benefit provided for in this Section 4 be reduced by any
compensation earned by you as the result of employment by
another employer, by retirement benefits, by offset against
any amount claimed to be owed by you to the Company (other
than by any cash payments which may be available to you under
the Company's Severance Policy), or otherwise except as
specifically provided in this Section 4.
(vi) In addition to all other amounts payable to you under this
Section 4, you shall be entitled to receive all benefits
available to you under the Company's Employees' Share Option
Plan, 401(k) profit sharing plan, and to Outplacement benefits
as defined in Section 5.5 of the Company's Severance Policy.
5. SUCCESSORS; BINDING AGREEMENT.
(i) The Company will require any successor (whether direct or
indirect, by purchase, merger, share exchange, consolidation
or otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree to
perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no
such succession had taken place. Failure of the Company to
obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of this
Agreement and shall entitle you to compensation from the
Company in the same amount and on the same terms as you would
be entitled to hereunder if you terminate your employment for
Good Reason following a Change of Control, except that for
purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which assumes and agrees
to perform this agreement by operation of law, or otherwise.
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(ii) This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives,
executors, administrators, heirs, distributees, and legatees.
If you should die while any amount would still be payable to
you hereunder if you had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance
with the terms of this agreement to your legatee or other
designee or, if there is no such designee, to your estate.
(iii) In the event that you are employed by a subsidiary of the
Company, wherever in this Agreement reference is made to the
"Company," unless the context otherwise requires, such
reference shall also include such subsidiary. The Company
shall cause such subsidiary to carry out the terms of this
Agreement insofar as they relate to the employment
relationship between you and such subsidiary, and the Company
shall indemnify you and save you harmless from and against all
liability and damage you may suffer as a consequence of such
subsidiary's failure to perform and carry out such terms.
Wherever reference is made to any benefit program of the
Company, such reference shall include, where appropriate, the
corresponding benefit program of such subsidiary if you were a
participant in such benefit program on the date a Change of
Control has occurred.
6. NOTICE. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notices to the Company shall be directed to the attention of the Board
with a copy to the Secretary of the Company, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
7. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by you and such officer as may be specifically designated
by the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. To the extent that
United States federal laws do not otherwise apply, the Plan shall be construed
in accordance with and governed by the laws of the Cayman Islands.
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8. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
9. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
10. ARBITRATION. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in the
State of Colorado, in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however,
that you shall be entitled to seek specific performance of your right
to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with this
Agreement.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter which
will then constitute our agreement on this subject.
Sincerely,
Apex Silver Mines Ltd.
By: ___________________________________
Agreed to as of the ____ day of ______________, 2004.
Signature: _____________________________
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