Exhibit 10.02


 


RESTRICTED SHARES AWARD AGREEMENT


 


This Restricted Shares
Award Agreement (the “Award Agreement”), made as of the 21st day of February,
2006 (the “Grant Date”), between Apex Silver Mines Limited, a Cayman Islands
corporation (“Apex”), and Keith R. Hulley (“Mr. Hulley”).


 


WHEREAS, Apex desires to encourage and enable Mr. Hulley
to acquire a proprietary interest in Apex through the ownership of Apex’s
ordinary shares, par value US$0.01 per share (the “Ordinary Shares”) pursuant
to the terms and conditions of the Apex Silver Mines Limited 2004 Equity
Incentive Plan (the “Plan”) and this Award Agreement.  Such ownership will provide Mr. Hulley
with a more direct stake in the future of Apex and encourage Mr. Hulley to
continue to serve as a Director of Apex.


 


1.             Grant
of Restricted Shares.


 


1.1           The Company hereby
grants to Mr. Hulley 20,000 restricted Ordinary Shares (the “Restricted
Shares”) on the terms and conditions set forth in this Award Agreement.


 


1.2           Mr. Hulley’s
rights with respect to the Restricted Shares shall remain forfeitable at all
times prior to the dates set forth below (each a  “Lapse Date”):


 




	
  Number of Shares

  	
   

  	
  Lapse Date

  
	
  5,000

  	
   

  	
  February 21, 2007

  
	
  5,000

  	
   

  	
  February 21, 2008

  
	
  5,000

  	
   

  	
  February 21, 2009

  
	
  5,000

  	
   

  	
  February 21, 2010

  






 


1.3           This Award Agreement
shall be construed in accordance with, and subject to, the terms of the
Plan.  For purposes of this Award
Agreement, all capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to them in the Plan.


 


2.             Rights
of Participant.


 


2.1           Except as provided
in Section 2.2, Section 6 and otherwise in this Award Agreement, Mr. Hulley
shall be entitled, at all times on and after the Grant Date, to exercise all
rights, powers and privileges of a shareholder with respect to the Restricted
Shares (whether or not the restrictions thereon shall have lapsed), other than
those Restricted Shares which have been forfeited pursuant to Section 3.2
hereof.


 


2.2           Prior to the earlier
of the Lapse Date or the Accelerated Lapse Date (as defined below in Section 3.1),
Mr. Hulley shall not be entitled to transfer, sell, pledge, encumber,
hypothecate or assign the Restricted Shares (collectively, the “Transfer
Restrictions”).


 

















 


3.             Lapse
of Restrictions.


 


3.1           The Transfer Restrictions
and all other restrictions with respect to the Restricted Shares shall lapse,
and such Restricted Shares shall become fully nonforfeitable on the earlier of
the following dates:


 


(a)           the applicable Lapse
Date, provided Mr. Hulley continues to serve as a director of Apex until
such Lapse Date; or


 


(b)           the date (the “Accelerated
Lapse Date”) of Mr. Hulley’s termination of service as a director of Apex (i) as
the result of Mr. Hulley’s death or Disability, (ii) as the result of
Mr. Hulley’s removal as a director of Apex without cause or his failure to
be reelected as a director of Apex by Apex Shareholders, or (iii) in
anticipation or as the result of a Change in Control as provided in Section 4.


 


3.2           Upon the termination
of Mr. Hulley’s service as a director of Apex prior to a Lapse Date, other
than as provided in Section 3.1(b), the Restricted Shares with respect to
which the Transfer Restrictions have not yet lapsed shall be forfeited and
automatically transferred to and reacquired by Apex at no cost to Apex, and
neither Mr. Hulley nor his heirs, executors, administrators or successors
shall have any right or interest in the Restricted Shares.


 


4.             Change of Control. 
Upon the occurrence of a Change of Control, the Transfer Restrictions
and all other restrictions shall lapse, the Restricted Shares shall become
fully nonforfeitable, and the Board shall have the power and discretion to
provide for modification of this award of Restricted Stock in accordance with
the Plan.  The provisions of this Section 4
shall not apply to any transaction undertaken for the purpose of
reincorporating Apex under the laws of another jurisdiction, if such
transaction does not materially affect the beneficial ownership of Apex’s
capital stock.


 


5.             Escrow
and Delivery of Shares.


 


5.1           Certificates
representing the Restricted Shares shall be issued in the name of Mr. Hulley
and held by Apex in escrow and shall remain in the custody of Apex until (i) their
delivery to Mr. Hulley or his estate as set forth in Section 5.2, or (ii) their
forfeiture and transfer to Apex as set forth in Section 3.2.


 


5.2           Certificates
representing the Restricted Shares shall be delivered to Mr. Hulley as
soon as practicable following the Lapse Date or Accelerated Lapse Date,
provided that Mr. Hulley has satisfied all applicable tax withholding
requirements with respect to the Restricted Shares.


 


(a)           If the Accelerated
Lapse Date occurs as a result of Mr. Hulley’s death, certificates
representing the Restricted Shares shall be delivered to Mr. Hulley’s
estate as soon as practicable following Apex’s receipt of an official death
certificate or other evidence of death acceptable to Apex, provided that Mr. Hulley’s
estate has satisfied all applicable tax withholding requirements with respect
to the Restricted Shares.


 


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6.             Dividends;
Voting Rights.


 


6.1           All dividends
declared and paid by Apex on Restricted Shares shall be held by Apex in escrow
for the account of Mr. Hulley. 
Dividends so held shall not bear interest.  Upon the earlier of the Lapse Date or the
Accelerated Lapse Date, the dividends shall be paid to Mr. Hulley or his
estate, as the case may be.  Upon the
forfeiture of the Restricted Shares pursuant to Section 3.2, all related
dividends shall also be forfeited.


 


6.2           Mr. Hulley
shall not have the right to vote all or any portion of the Restricted Shares
until the earlier of the applicable Lapse Date or the Accelerated Lapse Date.


 


7.             Adjustments Upon
Recapitalization.  If, by reason
of a recapitalization or other change in corporate or capital structure, Mr. Hulley
shall be entitled to new, additional or different shares of stock or securities
of Apex or any successor Company or entity or other property pursuant to Section 11
of the Plan, such new, additional or different shares or other property shall
thereupon be subject to all of the conditions and restrictions which were
applicable to the Restricted Shares immediately prior to such recapitalization
or other change in corporate or capital structure.


 


8.             Withholding of Taxes. 
If Mr. Hulley makes an election under Section 83(b) of
the Code with respect to the grant of Restricted Shares, the grant of the
Restricted Shares shall be conditioned upon the prompt payment by Mr. Hulley
to Apex of an amount equal to the applicable federal, state and local income
taxes and other amounts required by law to be withheld (the “Withholding Taxes”)
in connection with such election.  If Mr. Hulley
does not make an election under Section 83(b) of the Code with
respect to the grant of Restricted Shares, Mr. Hulley shall pay to Apex
the Withholding Taxes upon the earlier of a Lapse Date or Accelerated Lapse
Date.  The delivery of the Restricted
Shares and related dividends shall be conditioned upon the prior payment of the
applicable Withholding Taxes.


 


The Company shall have the right to require Mr. Hulley or Mr. Hulley’s
beneficiaries or legal representatives to remit to Apex an amount sufficient to
satisfy any Cayman Islands or United States federal, state and local withholding
tax requirements.  Whenever payments
under the Plan or this Award Agreement are to be made to Mr. Hulley in
cash, such payments shall be net of any amounts sufficient to satisfy all
applicable taxes, including without limitation, all applicable Cayman Islands
or United States federal, state and local withholding tax requirements to be
withheld or submitted by Apex concerning such payments.  The Board may, in its sole discretion, permit
Mr. Hulley to satisfy the withholding obligation either by (i) surrendering
Ordinary Shares owned by Mr. Hulley or (ii) having Apex withhold from
Ordinary Shares otherwise deliverable to Mr. Hulley.  Ordinary Shares surrendered or withheld shall
be valued at their Fair Market Value, as defined in the Plan as of the date on
which income is required to be recognized for income tax purposes.


 


9.             Modification of Award
Agreement.  Except as set forth in the Plan and in this
Award Agreement, this Award Agreement may be modified, amended, suspended or
terminated, and any terms or conditions may be waived, but only by a written
instrument executed by the parties hereto.


 


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10.          Plan Controlling. 
This Award Agreement is intended to conform in all respects with the
requirements of the Plan. 
Inconsistencies between the requirements of this Award Agreement and the
Plan shall be resolved according to the terms of the Plan.  Mr. Hulley acknowledges receipt of a
copy of the Plan.


 


11.          Severability. 
Should any provision of this Award Agreement be held by a court of
competent jurisdiction to be unenforceable or invalid for any reason, the
remaining provisions of this Award Agreement shall not be affected by such
holding and shall continue in full force and effect in accordance with their terms.


 


12.          Governing Law. 
This Award Agreement and all rights arising hereunder shall be governed
by, and construed and interpreted in accordance with, the laws of the State of
Colorado.


 


13.          Successors in Interest. 
This Award Agreement shall inure to the benefit of and be binding upon
any successor to Apex and upon Mr. Hulley’s heirs, executors,
administrators and successors.


 


	
   

  	
  APEX
  SILVER MINES LIMITED

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffrey G.
  Clevenger

  	
   

  
	
   

  	
   

  	
  Name:

  	
    Jeffrey G. Clevenger

  
	
   

  	
   

  	
  Title:

  	
    President and Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MR. HULLEY

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Keith R.
  Hulley

  	
   

  
	
   

  	
   

  	
  Name:

  	
    Keith R. Hulley

  
							



 


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