**Exhibit10.1**

 

**EXECUTIONCOPY**

 

**APEX SILVER MINESLIMITED**

 

6,375,000 Ordinary Shares

($.01 par value)

 

Underwriting Agreement

 

New York, New YorkApril 6, 2006

 

HarrisNesbitt Corp.

AsRepresentative of the several Underwriters

c/oHarris Nesbitt Corp.

3 TimesSquare

NewYork, NY 10036

 

Ladiesand Gentlemen:

 

Apex Silver Mines Limited, a Cayman Islands company(the “Company”), proposes to sell to the several underwriters named in ScheduleI hereto (the “Underwriters”), for whom you (the “Representative”) are actingas representative, 6,375,000 Ordinary Shares, $.01 per share par value (“OrdinaryShares”) of the Company (said shares to be issued and sold by the Company beinghereinafter called the “Securities”). To the extent there are no additionalUnderwriters listed on Schedule I other than you, the term Representative asused herein shall mean you, as Underwriter, and the terms Representative andUnderwriters shall mean either the singular or plural as the context requires. Theuse of the neuter in this Agreement shall include the feminine and masculinewherever appropriate. Any referenceherein to the Registration Statement, the Base Prospectus, any PreliminaryProspectus or the Final Prospectus shall be deemed to refer to and include thedocuments incorporated by reference therein pursuant to Item 12 of Form S-3which were filed under the Exchange Act on or before the Effective Date of theRegistration Statement or the issue date of the Base Prospectus, anyPreliminary Prospectus or the Final Prospectus, as the case may be; and anyreference herein to the terms “amend,” “amendment” or “supplement” with respectto the Registration Statement, the Base Prospectus, any Preliminary Prospectusor the Final Prospectus shall be deemed to refer to and include the filing ofany document under the Exchange Act after the Effective Date of theRegistration Statement or the issue date of the Base Prospectus, anyPreliminary Prospectus or the Final Prospectus, as the case may be, deemed tobe incorporated therein by reference. Certain terms used herein aredefined in Section 19 hereof.

 

1.             Representationsand Warranties. The Company represents and warrants to, and agrees with,each Underwriter as set forth below in this Section 1.

 

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(a)           TheCompany meets the requirements for use of Form S-3 under the Act and hasprepared and filed with the Commission a shelf registration statement (filenumber 333-117205), including a related Base Prospectus, for registration underthe Act of the offering and sale of the Securities. Such RegistrationStatement, including any amendments thereto filed prior to the Execution Time,has become effective. The Company may have filed with the Commission, as partof an amendment to the Registration Statement or pursuant to Rule 424(b), oneor more preliminary prospectus supplements relating to the Securities, each ofwhich has previously been furnished to you. The Company will file with theCommission a final prospectus supplement relating to the Securities inaccordance with Rule 424(b). As filed, such final prospectus supplement shallcontain all information required by the Act and the rules thereunder, and,except to the extent the Representative shall agree in writing to amodification, shall be in all substantive respects in the form furnished to youprior to the Execution Time or, to the extent not completed at the ExecutionTime, shall contain only such specific additional information and other changes(beyond that contained in the Base Prospectus and any Preliminary Prospectus)as the Company has advised you, prior to the Execution Time, will be includedor made therein. The Registration Statement, at the Execution Time, meets therequirements set forth in Rule 415(a)(1)(x).

 

(b)           On eachEffective Date, the Registration Statement did, and when the Final Prospectusis first filed in accordance with Rule 424(b) and on the Closing Date (asdefined herein), the Final Prospectus (and any supplement thereto) will, complyin all material respects with the applicable requirements of the Act, the ExchangeAct and the respective rules thereunder; on each Effective Date and at theExecution Time, the Registration Statement did not and will not contain anyuntrue statement of a material fact or omit to state any material fact requiredto be stated therein or necessary in order to make the statements therein notmisleading; and on the date of any filing pursuant to Rule 424(b) and onthe Closing Date, the Final Prospectus (together with any supplement thereto)will not include any untrue statement of a material fact or omit to state amaterial fact necessary in order to make the statements therein, in the lightof the circumstances under which they were made, not misleading; provided,however, that the Company makes no representations or warranties as tothe information contained in or omitted from the Registration Statement or theFinal Prospectus (or any supplement thereto) in reliance upon and in conformitywith information furnished in writing to the Company by or on behalf of anyUnderwriter through the Representative specifically for inclusion in theRegistration Statement or the Final Prospectus (or any supplement thereto), itbeing understood and agreed that the only such information furnished by or onbehalf of any Underwriter consists of the information described as such inSection 8 hereof.

 

(c)           The Disclosure Package when taken togetherwith the price to the public to be included on the cover page of the FinalProspectus does not contain any untrue statement of a material fact oromit to state any material fact necessary in order to make the statementstherein, in the light of the circumstances under which they were made, notmisleading. The preceding sentence does not apply to statements in or omissionsfrom the Disclosure Package based upon and in conformity with writteninformation furnished to the Company by any Underwriter through theRepresentative specifically for use therein, it being understood and agreedthat the only such information furnished by or on

 

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behalfof any Underwriter consists of the information described as such in Section 8hereof.

 

(d)           (i) At theearliest time after the filing of the Registration Statement that the Companyor another offering participant made a *bona**fide* offer (within the meaning ofRule 164(h)(2)) of the Act and (ii) as of the Execution Time (with such datebeing used as the determination date for purposes of this clause (ii)), theCompany was not and is not an Ineligible Issuer (as defined in Rule 405),without taking account of any determination by the Commission pursuant to Rule405 that it is not necessary that the Company be considered an IneligibleIssuer.

 

(e)           EachIssuer Free Writing Prospectus, if any, does not include any information thatconflicts with the information contained in the Registration Statement,including any document incorporated therein and any prospectus supplementdeemed to be a part thereof that has not been superseded or modified. Theforegoing sentence does not apply to statements in or omissions from any IssuerFree Writing Prospectus based upon and in conformity with written informationfurnished to the Company by any Underwriter through the Representativespecifically for use therein, it being understood and agreed that the only suchinformation furnished by or on behalf of any Underwriter consists of theinformation described as such in Section 8 hereof.

 

(f)            TheCompany is not, and after giving effect to the offering and sale of theSecurities and the application of the proceeds thereof as described in theDisclosure Package and the Final Prospectus will not be, required to registeras an “investment company” as defined in the Investment Company Act, withouttaking account of any exemption arising out of the number of holders of the Company’ssecurities.

 

(g)           TheCompany is subject to and in compliance with the reporting requirements ofSection 13 or Section 15(d) of the Exchange Act.

 

(h)           Unless asotherwise disclosed in the Disclosure Package and the Final Prospectus, theCompany has not paid or agreed to pay to any person any compensation forsoliciting another to purchase any securities of the Company (except ascontemplated in this Agreement).

 

(i)            TheCompany has not taken, directly or indirectly, any action designed to or that hasconstituted or that might reasonably be expected to cause or result, under theExchange Act or otherwise, in stabilization or manipulation of the price of anysecurity of the Company to facilitate the sale or resale of the Securities.

 

(j)            Each ofthe Company and its subsidiaries has been duly incorporated and is validlyexisting in good standing under the laws of the jurisdiction in which it ischartered or organized with full power and authority to own or lease, as thecase may be, and to operate its properties and conduct its business asdescribed in the Disclosure Package and the Final Prospectus, and is dulyqualified to do business as a foreign corporation and is in good standing underthe laws of each jurisdiction that requires such qualification, except wherethe failure to qualify or to be in good standing would not have

 

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amaterial adverse effect on the condition (financial or otherwise), prospects,earnings, business or properties of the Company and its subsidiaries, taken asa whole, whether or not arising from transactions in the ordinary course ofbusiness (a “Material Adverse Effect”).

 

(k)           All theoutstanding shares of capital stock of each material subsidiary have been dulyauthorized and validly issued and are fully paid and nonassessable, and, exceptas otherwise set forth in the Disclosure Package and the Final Prospectus, alloutstanding shares of capital stock of the material subsidiaries are owned bythe Company either directly or through wholly owned subsidiaries free and clearof any security interest, claim, lien or encumbrance.

 

(l)            TheCompany’s authorized equity capitalization is as set forth in the DisclosurePackage and the Final Prospectus; the capital stock of the Company conforms inall material respects to the description thereof contained in the DisclosurePackage and the Final Prospectus; the outstanding Ordinary Shares have beenduly authorized and validly issued and are fully paid and nonassessable; theholders of outstanding shares of capital stock of the Company are not entitledto preemptive or other rights to subscribe for the Securities or the OrdinaryShares; and, except as set forth in the Disclosure Package and the FinalProspectus and except for up to 25,000 Ordinary Shares to be issued to MarianaResources Limited, no options, warrants or other rights to purchase, agreementsor other obligations to issue, or rights to convert any obligations into orexchange any securities for, shares of capital stock of or ownership interestsin the Company are outstanding.

 

(m)          Thestatements in the Disclosure Package and the Final Prospectus under theheadings “Certain U.S. Federal Tax Considerations,” and the summaries of legaland regulatory matters and proceedings under the headings “Republic of Bolivia,”and “Description of the Ordinary Shares” fairly summarize the matters thereindescribed.

 

(n)           ThisAgreement has been duly authorized, executed and delivered by the Company.

 

(o)           TheSecurities have been duly authorized by the Company and, when issued anddelivered and paid for as provided herein, will be validly issued, fully paidand nonassessable and will conform to the descriptions thereof in theDisclosure Package and the Final Prospectus.

 

(p)           Noconsent, approval, authorization, filing with or order of any court orgovernmental agency or body is required in connection with the transactionscontemplated herein, except such (i) as may be required under the blue skylaws of any jurisdiction in which the Securities are offered and sold and (ii)such consents, approvals, authorizations, orders, registrations, filings and/orqualifications which, if not obtained, would not have a Material Adverse Effector affect the validity of the Securities or the legal authority of the Companyto comply with this Agreement.

 

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(q)           None ofthe execution and delivery of this Agreement, the issuance and sale of theSecurities, or the performance of any other of the obligations hereincontemplated, or the fulfillment of the terms hereof will conflict with, resultin a breach or violation or imposition of any lien, charge or encumbrance uponany property or assets of the Company or any of its subsidiaries pursuant to,(i) the charter or bylaws of the Company or any of its subsidiaries; (ii) theterms of any indenture, contract, lease, mortgage, deed of trust, noteagreement, loan agreement or other agreement, obligation, condition, covenantor instrument to which the Company or any of its subsidiaries is a party orbound or to which its or their 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 havingjurisdiction over the Company or any of its subsidiaries or any of its or theirproperties, except, with respect to clause (ii) and (iii) above, suchviolations or defaults which would not have a Material Adverse Effect or affectthe validity of the Securities or the legal authority of the Company to complywith this Agreement.

 

(r)            Theconsolidated financial statements and schedules of the Company and itsconsolidated subsidiaries included or incorporated by reference in theDisclosure Package and the Final Prospectus present fairly in all materialrespects the financial condition, results of operations and cash flows of theCompany as of the dates and for the periods indicated, comply as to form withthe applicable accounting requirements of Regulation S-X and have been preparedin conformity with generally accepted accounting principles applied on aconsistent basis throughout the periods involved (except as otherwise notedtherein); the selected financial data set forth under the caption “Summary ofFinancial Information” in the Final Prospectus fairly present, on the basisstated in the Disclosure Package and the Final Prospectus, the informationincluded therein.

 

(s)           No action,suit or proceeding by or before any court or governmental agency, authority orbody or any arbitrator involving the Company or any of its subsidiaries or itsor their property is pending or, to the best knowledge of the Company,threatened that (i) could reasonably be expected to have a material adverseeffect on the performance by the Company of this Agreement or the consummationof any of the transactions contemplated hereby or (ii) could reasonably beexpected to have a Material Adverse Effect, except as set forth in orcontemplated in the Disclosure Package and the Final Prospectus (exclusive ofany amendment or supplement thereto).

 

(t)            Each ofthe Company and its subsidiaries owns or leases all such properties as arenecessary to the conduct of its operations as presently conducted, and each ofthe Company and each of its subsidiaries owns, leases or possesses the rightsto all properties as are necessary to explore, develop and exploit the SanCristobal Project (as defined in the Disclosure Package and the FinalProspectus) in Bolivia, except, in each case, where the failure to own or leasesuch properties would not result in a Material Adverse Effect.

 

(u)           Neitherthe Company nor any of its subsidiaries is in violation of any law, rule orregulation of any foreign national, federal, state or local governmental or

 

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regulatoryauthority applicable to it or is not in non-compliance with any term orcondition of, or has failed to obtain and maintain in effect, any license,certificate, permit, registration, concession, franchise or other governmentalauthorization required for the ownership or lease of its property or theconduct of its business, other than those which are not currently required andwhich the Company expects to acquire in the ordinary course, which violation,non-compliance or failure would individually or in the aggregate have aMaterial Adverse Effect, whether or not arising from transactions in theordinary course of business, except as set forth in or contemplated in theDisclosure Package and the Final Prospectus; and the Company has not receivednotice of any governmental proceedings relating to the revocation or materialmodification of any such license, certificate, permit or other authorization,except as set forth in or contemplated in the Disclosure Package and the FinalProspectus.

 

(v)           Neitherthe Company nor any of its subsidiaries is in violation or default of (i) anyprovision of its charter or bylaws; (ii) the terms of any indenture, contract,lease, mortgage, deed of trust, note agreement, loan agreement or otheragreement, obligation, condition, covenant or instrument to which it is a partyor bound or to which its property is subject; or (iii) any statute, law, rule,regulation, judgment, order or decree applicable to the Company or any of itssubsidiaries of any court, regulatory body, administrative agency, governmentalbody, arbitrator or other authority having jurisdiction over the Company orsuch subsidiary or any of its properties, as applicable, except, with respectto clause (ii) and  (iii) above, such violations or defaults which wouldnot have a Material Adverse Effect or affect the validity of the Securities orthe legal authority of the Company to comply with this Agreement.

 

(w)          PricewaterhouseCoopersLLP, who have certified certain financial statements of the Company and itsconsolidated subsidiaries and delivered their report with respect to theaudited consolidated financial statements and schedules included orincorporated by reference in the Disclosure Package and the Final Prospectus,are independent public accountants with respect to the Company within themeaning of the Act.

 

(x)            There areno stamp or other issuance or transfer taxes or duties or other similar fees orcharges required to be paid in connection with the execution and delivery ofthis Agreement or the issuance or sale by the Company of the Securities.

 

(y)           TheCompany has filed all non-U.S., U.S. federal, state and local tax returns thatare required to be filed or has requested extensions thereof (except in anycase in which the failure so to file would not have a Material Adverse Effectand except as set forth in or contemplated in the Disclosure Package and theFinal Prospectus (exclusive of any amendment or supplement thereto)) and haspaid all taxes required to be paid by it and any other assessment, fine orpenalty levied against it, to the extent that any of the foregoing is due andpayable, except for any such assessment, fine or penalty that is currentlybeing contested in good faith or as would not have a Material Adverse Effectand except as set forth in or contemplated in the Disclosure Package and theFinal Prospectus (exclusive of any amendment or supplement thereto).

 

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(z)            No laborproblem or dispute with the employees of the Company or any of its subsidiariesexists or is threatened or imminent, and the Company is not aware of anyexisting or imminent labor disturbance by the employees of any of its or itssubsidiaries’ principal suppliers, contractors or customers, except as wouldnot have a Material Adverse Effect, and except as set forth in or contemplatedin the Disclosure Package and the Final Prospectus (exclusive of any amendmentor supplement thereto).

 

(aa)         The Companyand each of its subsidiaries are insured by insurers of recognized financialresponsibility against such losses and risks and in such amounts as are prudentand customary in the businesses in which they are engaged; all policies ofinsurance and fidelity or surety bonds insuring the Company or any of itssubsidiaries or their respective businesses, assets, employees, officers anddirectors are in full force and effect; the Company and its subsidiaries are incompliance with the terms of such policies and instruments; there are no claimsby the Company or any of its subsidiaries under any such policy or instrumentas to which any insurance company is denying liability or defending under areservation of rights clause; neither the Company nor any of its subsidiarieshas been refused any insurance coverage sought or applied for; and neither theCompany nor any of its subsidiaries has any reason to believe that it will notbe able to renew its existing insurance coverage as and when such coverageexpires or to obtain similar coverage from similar insurers as may be necessaryto continue its business at a cost that would not have a Material AdverseEffect except as set forth in or contemplated in the Disclosure Package and theFinal Prospectus (exclusive of any amendment or supplement thereto).

 

(bb)         No subsidiaryof the Company is currently prohibited, directly or indirectly, from paying anydividends to the Company, from making any other distribution on such subsidiary’scapital stock, from repaying to the Company any loans or advances to suchsubsidiary from the Company or from transferring any of such subsidiary’sproperty or assets to the Company or any other subsidiary of the Company,except as described in or contemplated in the Disclosure Package and the FinalProspectus (exclusive of any amendment or supplement thereto).

 

(cc)         The Companyand each of its subsidiaries maintain a system of internal accounting controlssufficient to provide reasonable assurance that (i) transactions are executedin accordance with management’s general or specific authorizations; (ii)transactions are recorded as necessary to permit preparation of financialstatements in conformity with generally accepted accounting principles and tomaintain asset accountability; (iii) access to assets is permitted only inaccordance with management’s general or specific authorization; and (iv) therecorded accountability for assets is compared with the existing assets atreasonable intervals and appropriate action is taken with respect to anydifferences.

 

(dd)         The Companyand its subsidiaries are (i) in compliance with any and all applicablenon-U.S., U.S. federal, state and local laws and regulations relating to theprotection of human health and safety, the environment or hazardous or toxicsubstances or wastes, pollutants or contaminants (“Environmental Laws”); (ii)have received and are in compliance with all permits, licenses or otherapprovals required of them under

 

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applicableEnvironmental Laws to conduct their respective businesses as presentlyconducted; and (iii) have not received notice of any actual or potentialliability under any Environmental Law, except where such non-compliance withEnvironmental Laws, failure to receive required permits, licenses or otherapprovals, or liability would not, individually or in the aggregate, have aMaterial Adverse Effect, except as set forth in or contemplated in theDisclosure Package and the Final Prospectus (exclusive of any amendment orsupplement thereto). Except as set forth in the Disclosure Package and theFinal Prospectus, neither the Company nor any of its subsidiaries has beennamed as a “potentially responsible party” under the ComprehensiveEnvironmental Response, Compensation, and Liability Act of 1980, as amended.

 

(ee)         In theordinary course of its business, the Company periodically reviews the effect ofEnvironmental Laws on the business, operations and properties of the Companyand its subsidiaries, in the course of which it identifies and evaluatesassociated costs and liabilities (including, without limitation, any capital oroperating expenditures required for clean-up, closure of properties orcompliance with Environmental Laws, or any permit, license or approval, anyrelated constraints on operating activities and any potential liabilities tothird parties); on the basis of such review, the Company has reasonablyconcluded that such associated costs and liabilities would not, singly or inthe aggregate, have a Material Adverse Effect, except as set forth in or contemplatedin the Disclosure Package and the Final Prospectus (exclusive of any amendmentor supplement thereto).

 

(ff)           Theminimum funding standard under Section 302 of the Employee Retirement IncomeSecurity Act of 1974, as amended, and the regulations and publishedinterpretations thereunder (“ERISA”), has been satisfied by each “pension plan”(as defined in Section 3(2) of ERISA) which has been established or maintainedby the Company and/or one or more of its subsidiaries, and the trust formingpart of each such plan which is intended to be qualified under Section 401 ofthe Code is so qualified; each of the Company and its subsidiaries hasfulfilled its obligations, if any, under Section 515 of ERISA; neither theCompany nor any of its subsidiaries maintains or is required to contribute to a“welfare plan” (as defined in Section 3(1) of ERISA) which provides retiree orother post-employment welfare benefits or insurance coverage (other than “continuationcoverage” (as defined in Section 602 of ERISA)); each pension plan and welfareplan established or maintained by the Company and/or one or more of itssubsidiaries is in compliance in all material respects with the currentlyapplicable provisions of ERISA; and neither the Company nor any of itssubsidiaries has incurred or could reasonably be expected to incur anywithdrawal liability under Section 4201 of ERISA, any liability under Section4062, 4063, or 4064 of ERISA, or any other liability under Title IV of ERISA.

 

(gg)         Thesubsidiaries listed on Annex A attached hereto are the only “significantsubsidiaries” of the Company (as defined in Rule l-02 of Regulation S-X underthe Act).

 

(hh)         The Company has not taken any action or omitted to take any action (suchas issuing any press release relating to any Securities without an appropriatelegend)

 

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which may result in the loss by any of the Underwritersof the ability to rely on any stabilization safe harbor provided by theFinancial Services Authority under the Financial Services and Markets Act 2000(the “FSMA”). The Company has been informed of the guidance relating tostabilization provided by the Financial Services Authority, in particular inSection MAR 2 Annex 2G of the Financial Services Handbook.

 

(ii)           Except asset forth in the Disclosure Package and the Final Prospectus, none of theCompany, its subsidiaries or, to the knowledge of the Company, any director,officer, agent, employee or Affiliate of the Company or any of itssubsidiaries, is aware of or, in connectionwith their services to the Company, has taken any action, directly orindirectly, that would result in a violation by such persons of ForeignCorrupt Practices Act of 1977, as amended, and the rules and regulationsthereunder (the “FCPA”), including, withoutlimitation, making use of the mails or any means or instrumentality ofinterstate commerce corruptly in furtherance of an offer, payment, promise topay or authorization of the payment of any money, or other property, gift,promise to give, or authorization of the giving of anything of value to any “foreignofficial” (as such term is defined in the FCPA) or any foreign political partyor official thereof or any candidate for foreign political office, incontravention of the FCPA; and the Company, its subsidiaries and, to theknowledge of the Company, its Affiliates have conducted their businesses incompliance in all material respects with the FCPA and have instituted andmaintain policies and procedures designed to ensure, and which are reasonablyexpected to continue to ensure, continued material compliance therewith.

 

(jj)           Theoperations of the Company and its subsidiaries are and have been conducted atall times in compliance in all material respects with applicable financialrecordkeeping and reporting requirements of the Currency and ForeignTransactions Reporting Act of 1970, as amended, the money laundering statutesof all jurisdictions, the rules and regulations thereunder and any related orsimilar rules, regulations or guidelines, issued, administered or enforced byany governmental agency (collectively, the “Money Laundering Laws”), and noaction, suit or proceeding by or before any court or governmental agency,authority or body or any arbitrator involving the Company or any of itssubsidiaries with respect to the Money Laundering Laws is pending or, to thebest knowledge of the Company, threatened.

 

(kk)         Noneof the Company, any of its subsidiaries or, to the knowledge of the Company,any director, officer, agent, employee or Affiliate of the Company or any ofits subsidiaries is currently subject toany U.S. sanctions administered by the Office of Foreign Assets Control of theU.S. Department of the Treasury (“OFAC”); and the Company will not directly or indirectly use theproceeds of the offering of the Securities hereunder, or lend, contribute orotherwise make available such proceeds to any subsidiary, joint venture partneror other person or entity, for the purpose of financing the activities of anyperson currently subject to any U.S.sanctions administered by OFAC.

 

(ll)           There is and has been no failure on the partof the Company and any of the Company’s directors or officers, in theircapacities as such, to comply with any provision of the Sarbanes Oxley Act of2002 and the rules and regulations promulgated in

 

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connection therewith (the “Sarbanes Oxley Act”),including Section 402 related to loans and Sections 302 and 906 related tocertifications.

 

(mm)       Prior to thedate hereof, the Company has furnished to the Representative letters, each substantially in the form of ExhibitA hereto, duly executed by each officer of the Company identified on Annex Bhereto and director of the Company and addressed to the Representative.

 

(nn)         No stamp orother issuance or transfer taxes or duties and no capital gains, income,withholding or other taxes are payable by or on behalf of the Underwiters tothe Cayman Islands or any political subdivision or taxing authority thereof ortherein purely as a direct consequence of the issue of Securities by theCompany to or for the respective accounts of the Underwriters, in each case forresale and delivery in the manner contemplated herein.

 

(oo)         Theinformation set forth in the Disclosure Package and the Final Prospectusrelating to the proven and probable ore reserves located at the San CristobalProject as of December 31, 2005 has been prepared by Mine Reserves AssociatesInc. materially in accordance with methods generally applied in the mining industryand conforms in all material respects to the rules and regulations of theCommission.

 

Any certificate signed by any officer of the Companyand delivered to the Representativeor counsel for the Underwriters in connection with the offering of the Securitiesshall be deemed a representation and warranty by the Company, as to matterscovered thereby, to each Underwriter.

 

2.             Purchaseand Sale. Subject to the terms and conditions and in reliance upon therepresentations and warranties herein set forth, the Company agrees to sell toeach Underwriter, and each Underwriter agrees, severally and not jointly, topurchase from the Company, at a purchase price of $23.70 per share, the amountof the Securities set forth opposite such Underwriter’s name in Schedule Ihereto.

 

3.             Deliveryand Payment. Delivery of and payment for the Securities shall be made at10:00 A.M., New York City time, on April 12, 2006, or at such time on suchlater date not more than three Business Days after the foregoing date as theRepresentative shall designate, which date and time may be postponed byagreement between the Representative and the Company or as provided inSection 9 hereof (such date and time of delivery and payment for theSecurities being herein called the “Closing Date”). Delivery of the Securitiesshall be made to the Representative for the respective accounts of the severalUnderwriters against payment by the several Underwriters through theRepresentative of the purchase price thereof to or upon the order of the Companyby wire transfer payable in same-day funds to the account specified by theCompany. Delivery of the Securities shall be made through the facilities of TheDepository Trust Company unless the Representative shall otherwise instruct.

 

4.             Offeringby Underwriters. It is understood that the several Underwriters propose tooffer the Securities for sale to the public as set forth in the FinalProspectus.

 

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5.             Agreements.The Company agrees with the several Underwriters that:

 

(a)           Priorto the termination of the offering of the Securities, the Company will not fileany amendment of the Registration Statement or supplement (including the FinalProspectus or any Preliminary Prospectus) to the Base Prospectus or any Rule462(b) Registration Statement unless the Company has furnished you a copy foryour review prior to filing and will not file any such proposed amendment orsupplement to which you reasonably object. The Company will cause the FinalProspectus, properly completed, and any supplement thereto to be filed in aform approved by the Representative with the Commission pursuant to theapplicable paragraph of Rule 424(b) within the time period prescribed andwill provide evidence satisfactory to the Representative of such timely filing.The Company will promptly advise the Representative (i) when the FinalProspectus, 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,(ii) when, prior to termination of the offering of the Securities, anyamendment to the Registration Statement shall have been filed or becomeeffective, (iii) of any request by the Commission or its staff for anyamendment of the Registration Statement, or any Rule 462(b) RegistrationStatement, or for any supplement to the Final Prospectus or for any additionalinformation, (iv) of the issuance by the Commission of any stop ordersuspending the effectiveness of the Registration Statement or of any noticeobjecting to its use or the institution or threatening of any proceeding forthat purpose and (v) of the receipt by the Company of any notificationwith respect to the suspension of the qualification of the Securities for salein any jurisdiction or the institution or threatening of any proceeding forsuch purpose. The Company will use its best efforts to prevent the issuance ofany such stop order or the occurrence of any such suspension or objection to theuse of the Registration Statement and, upon such issuance, occurrence or noticeof objection, to obtain as soon as possible the withdrawal of such stop orderor relief from such occurrence or objection, including, if necessary, by filingan amendment to the Registration Statement or a new registration statement andusing its best efforts to have such amendment or new registration statementdeclared effective as soon as practicable.

 

(b)           If,at any time prior to the filing of a final prospectus pursuant to Rule 424(b),any event occurs as a result of which the Disclosure Package would include anyuntrue statement of a material fact or omit to state any material factnecessary to make the statements therein in the light of the circumstancesunder which they were made at such time not misleading, the Company will (i)notify promptly the Representative so that any use of the Disclosure Packagemay cease until it is amended or supplemented; (ii) amend or supplement theDisclosure Package to correct such statement or omission; and (iii) supply anyamendment or supplement to you in such quantities as you may reasonablyrequest.

 

(c)           If,at any time when the Final Prospectus relating to the Securities is required tobe delivered under the Act (including in circumstances where such requirementmay be satisfied pursuant to Rule 172), any event occurs as a result of whichthe Final Prospectus as then supplemented would include any untrue statement ofa material fact or omit to state any material fact necessary to make thestatements therein in the light of the circumstances under which they were madeat such time not misleading, or if it shall be necessary to amend theRegistration Statement, file a new registration statement or supplement theFinal Prospectus to comply with the Act or the Exchange Act or the respectiverules thereunder, including in connection with use

 

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or delivery of the Final Prospectus, the Companypromptly will (i) notify the Representative of any such event;(ii) prepare and file with the Commission, subject to the second sentenceof paragraph (a) of this Section 5, an amendment or supplement or newregistration statement which will correct such statement or omission or effectsuch compliance; (iii) use its best efforts to have any amendment to theRegistration Statement or new registration statement declared effective as soonas practicable in order to avoid any disruption in use of the Final Prospectus;and (iv) supply any supplemented Final Prospectus to you in suchquantities as you may reasonably request.

 

(d)           Assoon as practicable, the Company will make generally available to its securityholders and to the Representative an earnings statement or statements of theCompany and its subsidiaries which will satisfy the provisions ofSection 11(a) of the Act and Rule 158.

 

(e)           TheCompany will furnish to the Representative and counsel for the Underwriters,without charge, signed copies of the Registration Statement (including exhibitsthereto) and to each other Underwriter a copy of the Registration Statement(without exhibits thereto) and, so long as delivery of a prospectus by anUnderwriter or dealer may be required by the Act (including in circumstanceswhere such requirement may be satisfied pursuant to Rule 172), as many copiesof each Preliminary Prospectus, the Final Prospectus and each Issuer FreeWriting Prospectus and any supplement thereto as the Representative mayreasonably request. The Company will pay the expenses of printing or other productionof all documents relating to the offering.

 

(f)            TheCompany will arrange, if necessary, for the qualification of the Securities forsale under the laws of such jurisdictions as the Representative may reasonablyrequest, will maintain such qualifications in effect so long as required forthe distribution of the Securities and will pay any fee of the NationalAssociation of Securities Dealers, Inc., in connection with its review of theoffering; provided that in no event shall the Company be obligated toqualify to do business in any jurisdiction where it is not now so qualified orto take any action that would subject it to service of process in suits, otherthan those arising out of the offering or sale of the Securities, in anyjurisdiction where it is not now so subject.

 

(g)           TheCompany will not, for a period of 90 days following the Execution Time, withoutthe prior written consent of Harris Nesbitt Corp., directly or indirectly,offer, sell, contract to sell, pledge, otherwise dispose of, enter into anytransaction which is designed to, or might reasonably be expected to, result inthe disposition (whether by actual disposition or effective economicdisposition due to cash settlement or otherwise) by the Company or anyAffiliate of the Company or any person in privity with the Company or anyAffiliate of the Company of, file (or participate in the filing of) aregistration statement with the Commission in respect of, or establish orincrease a put equivalent position or liquidate or decrease a call equivalentposition within the meaning of Section 16 of the Exchange Act in respect of,any shares of capital stock of the Company or any securities convertible into,or exercisable or exchangeable for, shares of capital stock of the Company(other than the Securities), or publicly announce an intention to effect anysuch transaction; provided, however, that the Company may (i)issue and sell Ordinary Shares or securities convertible into or exchangeablefor Ordinary Shares pursuant to any employee or director stock option plan,stock ownership plan or dividend reinvestment plan of the Company described inthe Disclosure Package and the Final Prospectus

 

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and in effect at the Execution Time; (ii) issue OrdinaryShares issuable upon the conversion of securities or the exercise of warrantsoutstanding at the Execution Time and described in the Disclosure Package andthe Final Prospectus; (iii) issue up to 25,000 Ordinary Shares to MarianaResources Limited; and (iv) file and cause to become effective a registrationstatement registering the Ordinary Shares issuable upon the exercise ofwarrants set forth on Annex C.

 

(h)           TheCompany will not take, directly or indirectly, any action designed to or thatwould constitute or that might reasonably be expected to cause or result in,under the Exchange Act or otherwise, stabilization or manipulation of the priceof any security of the Company to facilitate the sale or resale of theSecurities.

 

(i)            TheCompany agrees to pay the costs and expenses relating to the followingmatters:  (i) the preparation,printing or reproduction and filing with the Commission of the RegistrationStatement (including financial statements and exhibits thereto), eachPreliminary Prospectus, the Final Prospectus and each Issuer Free WritingProspectus, if any, and each amendment or supplement to any of them;(ii) the printing (or reproduction) and delivery (including postage, airfreight charges and charges for counting and packaging) of such copies of theRegistration Statement, each Preliminary Prospectus, the Final Prospectus andeach Issuer Free Writing Prospectus, if any, and all amendments or supplementsto any of them, as may, in each case, be reasonably requested for use inconnection with the offering and sale of the Securities; (iii) thepreparation, printing, authentication, issuance and delivery of certificatesfor the Securities, including any stamp or transfer taxes in connection withthe original issuance and sale of the Securities; (iv) the printing (orreproduction) and delivery of this Agreement, any blue sky memorandum and allother agreements or documents printed (or reproduced) and delivered inconnection with the offering of the Securities; (v) the registration ofthe Securities under the Exchange Act and the listing of the Securities on theAmerican Stock Exchange; (vi) any registration or qualification of theSecurities for offer and sale under the securities or blue sky laws of theseveral states (including filing fees and the reasonable fees and expenses ofcounsel for the Underwriters relating to such registration and qualification);(vii) any filings required to be made with the National Association ofSecurities Dealers, Inc. (including filing fees and the reasonable fees andexpenses of counsel for the Underwriters relating to such filings);(viii) the transportation and other expenses incurred by or on behalf ofCompany representatives in connection with presentations to prospectivepurchasers of the Securities; (ix) the fees and expenses of the Company’saccountants and the fees and expenses of counsel (including local and specialcounsel) for the Company; and (x) all other costs and expenses incident tothe performance by the Company of its obligations hereunder.

 

(j)            TheCompany agrees that, unless it has obtained or will obtain the prior writtenconsent of the Representative, and each Underwriter, severally and not jointly,agrees with the Company that, unless it has obtained or will obtain, as thecase may be, the prior written consent of the Company, it has not made and willnot make any offer relating to the Securities that would constitute an IssuerFree Writing Prospectus or that would otherwise constitute a “free writingprospectus” (as defined in Rule 405) required to be filed by the Company withthe Commission or retained by the Company under Rule 433; provided thatthe prior written consent of the parties hereto shall be deemed to have beengiven in respect of the Free Writing Prospectuses included in Schedule IIhereto, if any. Any such free writing prospectus consented to by theRepresentative or the Company is hereinafter referred to as a “Permitted FreeWriting

 

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Prospectus.” The Company agrees that (x) it has treated and will treat, as the casemay be, each Permitted Free Writing Prospectus as an Issuer Free WritingProspectus and (y) it has complied and will comply, as the case may be, withthe requirements of Rules 164 and 433 applicable to any Permitted Free WritingProspectus, including in respect of timely filing with the Commission,legending and record keeping.

 

(k)           TheCompany will not amend or supplement the Final Prospectus, other than by filingdocuments under the Exchange Act that are incorporated by reference therein,without the prior written consent of the Representative, which shall not beunreasonably withheld; provided, however, that, prior to thecompletion of the distribution of the Securities by the Underwriters (asdetermined by the Underwriters), the Company will not file any document underthe Exchange Act that is incorporated by reference in the Final Prospectusunless, prior to such proposed filing, the Company has furnished theRepresentative with a copy of such document for their review and theRepresentative has not timely and reasonably objected to the filing of suchdocument. The Company will promptly advise the Representative when any documentfiled under the Exchange Act that is incorporated by reference in the FinalProspectus shall have been filed with the Commission.

 

(l)            TheCompany will, for a period of twelve months following the Execution Time,furnish to the Representative (i) all reports or other communications(financial or other) generally made available to stockholders, and deliver suchreports and communications to the Representative as soon as they are available,unless such documents are furnished to or filed with the Commission or anysecurities exchange on which any class of securities of the Company is listed andgenerally made available to the public and (ii) subject to applicablerequirements of Regulation FD, such additional information concerning thebusiness and financial condition of the Company as the Representative may fromtime to time reasonably request (such statements to be on a consolidated basisto the extent the accounts of the Company and its subsidiaries are consolidatedin reports furnished to stockholders).

 

(m)          TheCompany will comply with all applicable securities and other laws, rules and regulations,including, without limitation, the Sarbanes Oxley Act, and use its best effortsto cause the Company’s directors and officers, in their capacities as such, tocomply with such laws, rules and regulations, including, without limitation,the provisions of the Sarbanes Oxley Act.

 

(n)           TheCompany will not take any action or omit to take any action (such as issuingany press release relating to any Securities without an appropriate legend)which may result in the loss by any Underwriters of the ability to rely on anystabilization safe harbor provided by the Financial Services Authority underthe FSMA.

 

6.             Conditionsto the Obligations of the Underwriters. The obligations of the Underwritersto purchase the Securities shall be subject to the accuracy of therepresentations and warranties on the part of the Company contained herein atthe Execution Time and the Closing Date pursuant to Section 3 hereof, tothe accuracy of the statements of the Company made in any certificates pursuantto the provisions hereof, to the performance by the Company of its obligationshereunder and to the following additional conditions:

 

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(a)           TheFinal Prospectus, and any supplement thereto, have been filed in the manner andwithin the time period required by Rule 424(b); and any other materialrequired to be filed by the Company pursuant to Rule 433(d) under the Act shallhave been filed with the Commission within the applicable time periodsprescribed for such filings by Rule 433; and no stop order suspending theeffectiveness of the Registration Statement or any notice objecting to its useshall have been issued and no proceedings for that purpose shall have beeninstituted or threatened.

 

(b)           TheCompany shall have requested and caused Walkers, Cayman Islands counsel for theCompany, to have furnished to the Representative their opinion, dated theClosing Date and addressed to the Representative, to the effect that:

 

(i)            TheCompany is a company duly incorporated, validly existing and in good standingunder the laws of the Cayman Islands, with full corporate power an authority toown its properties and conduct its business as described in the DisclosurePackage and the Final Prospectus, and is duly qualified to do business as aforeign corporation and is in good standing under the laws of each jurisdictionwhich requires such qualification, except to the extent that failure to soqualify would not have a Material Adverse Effect;

 

(ii)           TheCompany’s authorized equity capitalization is as set forth in the DisclosurePackage and the Final Prospectus; the capital stock of the Company conforms tothe description thereof contained in the Disclosure Package and the FinalProspectus; the outstanding Ordinary Shares have been duly and validlyauthorized and issued and are fully paid and nonassessable; the Securitiesbeing sold hereunder by the Company have been duly and validly authorized, and,when issued and delivered to and paid for by the Underwriters pursuant to thisAgreement will be fully paid and nonassessable; the certificates for theSecurities are in valid and sufficient form; the holders of outstanding sharesof capital stock of the Company are not entitled to preemptive or other rightsto subscribe for the Securities; and, except as set forth in the DisclosurePackage and the Final Prospectus, no options, warrants or other rights topurchase, agreements or other obligations to issue, or rights to convert anyobligations into or exchange any securities for, shares of capital stock of orownership interests in the Company are outstanding;

 

(iii)          ThisAgreement has been duly authorized by all necessary corporate action on thepart of the Company and has been duly executed and delivered by the Company;

 

(iv)          Except asset forth in the Disclosure Package and the Final Prospectus, there is, to ourcurrent actual knowledge, no action, suit or proceeding pending against theCompany, its subsidiaries or their respective properties in any court or beforeany governmental authority or agency, or arbitration board or tribunal of theCayman Islands which, if

 

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adversely determined, could reasonably be expected tohave a Material Adverse Effect; and the summaries of legal and regulatory mattersand proceedings under the heading “Description of the Ordinary Shares” fairlysummarize the matters therein described;

 

(v)           Neitherthe issue and sale of the Securities, nor the consummation of any other of thetransactions contemplated herein nor the fulfillment of the terms hereof willconflict with, result in a breach or violation or imposition of any lien,charge or encumbrance upon any property or assets of the Company or itssubsidiaries pursuant to, (a) the Memorandum and Articles of Association of theCompany or its subsidiaries, or (b) any statute, law, rule, regulation,judgment, order or decree applicable to the Company or its subsidiaries of anycourt, regulatory body, administrative agency, governmental body, arbitrator orother authority of the Cayman Islands having jurisdiction over the Company orits subsidiaries or any of its or their respective properties, except wheresuch breach, violation or imposition would not individually or in the aggregatehave a Material Adverse Effect;

 

(vi)          The Company’sagreement to the choice of law provisions set forth in Section 15 hereof willbe recognized by the courts of the Cayman Islands; the Company can sue and besued in its own name under the laws of the Cayman Islands, the irrevocablesubmission of the Company to the non-exclusive personal jurisdiction of a NewYork Court, the waiver by the Company of any objection to the venue of aproceeding of a New York Court and the agreement of the Company that thisAgreement shall be governed by and construed in accordance with the laws of theState of New York are legal, valid and binding; and judgment obtained in a NewYork Court arising out of or in relation to the obligations of the Companyunder this Agreement, not being a sum payable in respect of taxes or othercharges of a like nature or a fine or other penalty, is enforceable against theCompany in the courts of the Cayman Islands; and

 

(vii)         TheCompany is not entitled to any immunity on the basis of sovereignty orotherwise in respect of its obligations under this Agreement and could notsuccessfully interpose any such immunity as a defense in any suit or actionbrought or maintained in respect of its obligations under this Agreement.

 

In rendering suchopinion, such counsel may rely (A) as to matters involving the applicationof laws of any jurisdiction other than the laws of the Cayman Islands, to theextent they deem proper and specified in such opinion, upon the opinion ofother counsel of good standing whom they believe to be reliable and who are satisfactoryto counsel for the Underwriters and (B) as to matters of fact, to theextent they deem proper, on certificates of responsible officers of the Companyand public officials. References to the

 

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Final Prospectus in thisparagraph (b) include any amendment or supplement thereto at the ClosingDate.

 

(c)           TheCompany shall have requested and caused Davis Graham & Stubbs LLP, counselfor the Company, to furnish to the Representative its opinion, dated theClosing Date and addressed to the Representative, to the effect that:

 

(i)            Except asdisclosed in the Disclosure Package and the Final Prospectus, there are, to ourcurrent actual knowledge, (a) no outstanding subscriptions, warrants, options,calls, claims, commitments, convertible securities or other agreements orarrangements under which the Company is or may be obligated to issue shares ofits capital stock, and (b) no preemptive or similar rights to subscribe for orto purchase capital stock of the Company;

 

(ii)           Theexecution and delivery of this Agreement and the issuance and sale of theSecurities will not breach or result in a violation of (a) the terms of anyindenture, contract, lease, mortgage, deed of trust, note agreement, loanagreement or other agreement, obligation, condition, covenant or instrumentfiled as a material contract by the Company under the Exchange Act to which theCompany or its subsidiaries is a party or bound or to which their respectiveproperty is subject, or (b) any statute, law, rule, regulation, judgment, orderor decree applicable to the Company or its subsidiaries of any court,regulatory body, administrative agency, governmental body, arbitrator or otherauthority having jurisdiction over the Company or its subsidiaries or any ofits or their respective properties, except where such breach, violation orimposition would not individually or in the aggregate have a Material AdverseEffect;

 

(iii)          Noconsent, approval or authorization of, or designation, declaration or filingwith, any governmental authority in the United States is required in connectionwith the valid execution, delivery and performance by the Company of thisAgreement or the issuance and sale of the Securities, other than (a) as may berequired under the blue sky or securities laws of any jurisdiction in which theSecurities are offered or sold, and (b) such consents, approvals,authorizations, designations, declarations or filings as have been made orobtained on or before the date hereof;

 

(iv)          Except asset forth in the Disclosure Package and the Final Prospectus, there is, to ourcurrent actual knowledge, no action, suit or proceeding pending against theCompany, its subsidiaries or their respective properties in any court or beforeany governmental authority or agency, or arbitration board or tribunal which,if adversely determined, could reasonably be expected to have a MaterialAdverse Effect;

 

(v)           Thestatements set forth under the heading “Description of Ordinary Shares” in the DisclosurePackage and the Final Prospectus, insofar as such statements purport tosummarize certain provisions of the Ordinary Shares provide a fair summary ofsuch provisions;

 

(vi)          The Companyis not and, after giving effect to the offering and sale of the Securities andthe application of the proceeds thereof as described in the Disclosure

 

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Package and the Final Prospectus, will not be,required to register as an “investment company” as defined in the InvestmentCompany Act of 1940, as amended, without taking account of any exemptionarising out of the number of holders of the Company’s securities;

 

(vii)         TheRegistration Statement has become effective under the Act; any required filingof the Base Prospectus, and any Preliminary Prospectus and the FinalProspectus, and any supplements thereto, pursuant to Rule 424(b) has beenmade in the manner and within the time period required by Rule 424(b); tothe knowledge of such counsel, no stop order suspending the effectiveness ofthe Registration Statement or any notice objecting to its use has been issued,no proceedings for that purpose have been instituted or threatened, and theRegistration Statement and the Final Prospectus (other than the financialstatements and other financial, statistical and reserve information containedtherein, as to which such counsel need express no opinion) comply as to form inall material respects with the applicable requirements of the Act and the rulesthereunder;

 

(viii)        Noconsent, approval, authorization, filing with or order of any court orgovernmental agency or body is required in connection with the transactionscontemplated herein, except such as have been obtained under the Act and suchas may be required under the blue sky laws of any jurisdiction in connectionwith the purchase and distribution of the Securities by the Underwriters in themanner contemplated in this Agreement and in any Preliminary Prospectus and theFinal Prospectus and such other approvals (specified in such opinion) as havebeen obtained;

 

(ix)           To ourknowledge, no holders of securities of the Company have rights to theregistration of such securities under the Registration Statement;

 

(x)            Thestatements in the Final Prospectus the heading “Certain U.S. Federal Tax Considerations,”insofar as such statements constitute a summary of matters of United States taxlaws referred to therein, fairly summarize in all material respects the matterstherein described; and

 

(xi)           Assumingthat Colorado law is identical to New York law, this Agreement has been dulyexecuted and delivered by the Company under New York law.

 

In rendering such opinion, such counsel may rely as tomatters of fact, to the extent they deem proper, on certificates of responsibleofficers of the Company and public officials. References to the FinalProspectus in this Section 6(b) include any amendment or supplement thereto atthe Closing Date.

 

In addition, such counselshall advise the Underwriters to the effect that, in connection with suchcounsel’s participation in the preparation of the Final Prospectus, while ithas not independently verified the accuracy, completeness or fairness of thestatements contained therein (except with respect to the matters opined upon inparagraphs (v) and (x) above), and subject to the fact that the limitationsinherent in the examination made by, and the knowledge available to, suchcounsel are such that it is unable to assume, and does not assume, anyresponsibility for the

 

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accuracy, completeness or fairness of the statementscontained in the Registration Statement, the Base Prospectus and the FinalProspectus (except with respect to the matters opined upon in paragraphs (v)and (x) above), on the basis of its examination and participation inconferences with certain officers of the Company, its independent publicaccountants and Representative of the Underwriters in connection with thepreparation of the Final Prospectus, it can advise the Underwriterssupplementally, as of the date thereof or the date of such opinion, that it hasno current actual knowledge that (i) on the Effective Date the RegistrationStatement contained any untrue statement of a material fact or omitted to stateany material fact required to be stated therein or necessary to make thestatements therein not misleading or (ii) that the Final Prospectus as of itsdate and on the Closing Date included or includes any untrue statement of amaterial fact or omitted or omits to state a material fact necessary to makethe statements therein, in the light of the circumstances under which they weremade, not misleading (in each case, other than the financial statements andother financial, statistical or reserve information contained therein, as towhich such counsel need express no opinion)****or(iii) the documents specified in a schedule to such counsel’s letter,consisting of those included in the Disclosure Package, and the price to the public to be included onthe cover page of the Final Prospectus, when taken together as a whole, as ofthe Execution Time, contained any untrue statement of a material fact oromitted to state any material fact necessary in order to make the statementstherein, in the light of the circumstances under which they were made, not misleading.However, such counsel need not express any belief as to the financialstatements and the notes thereto or the schedules or other financial,statistical or reserve data contained in the Registration Statement or theFinal Prospectus or omitted therefrom.

 

(d)           TheCompany shall have requested and caused Quintanilla & Soria, Boliviancounsel for the Company, to furnish to the Representative its opinion, datedthe Closing Date and addressed to the Representative, to the effect that:

 

(i)            Minera San Cristobal S.A. is a corporation (*sociedad anonima*) existing under the lawsof Bolivia;

 

(ii)           Minera San Cristobal S.A. has all necessarypower and authority to own property and carry on its business;

 

(iii)          Minera San Cristobal S.A. is the registeredand beneficial owner of the mining concessions listed on a schedule attachedthereto, free and clear of all encumbrances in favor of, and any rights andinterests of, any other person;

 

(iv)          The authorized capital and the issued andoutstanding common shares of Minera San Cristobal S.A., as well as theregistered holders of the issued common shares, are as follows:

 

Outstanding Shares:13,856,610

 

Apex Silver Mines Sweden AB:13,856,608

 

Apex Luxembourg s.a.r.l.: 1

 

Apex Metals GmbH: 1

 

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(e)           TheCompany shall have requested and caused Bonn Schmitt Steichen, Luxembourgcounsel for the Company, to furnish to the Representative its opinion, datedthe Closing Date and addressed to the Representative, to the effect that:

 

(i)            Apex Luxembourg s.a.r.l. is a *société à responsabilité limitée* existingunder the laws of Luxembourg;

 

(ii)           Apex Luxembourg s.a.r.l. has all necessarypower and authority to own property and carry on its business;

 

(iii)          All of the issued and outstanding capitalstock of Apex Luxembourg s.a.r.l. is owned of record by Apex Silver MinesLimited.

 

(f)            TheCompany shall have requested and caused Wistrand Advokatbyra, Swedish counselfor the Company, to furnish to the Representative its opinion, dated the ClosingDate and addressed to the Representative, to the effect that:

 

(i)            Apex Silver Mines Sweden AB is a *privat aktiebolag* existing under the lawsof Sweden;

 

(ii)           Apex Silver Mines Sweden AB has all necessarypower and authority to own property and carry on its business;

 

(iii)          All of the issued and outstanding capitalstock of Apex Silver Mines Sweden AB is owned by Apex Luxembourg s.a.r.l.

 

(g)           TheRepresentative shall have received from Cleary Gottlieb Steen & HamiltonLLP, counsel for the Underwriters, such opinion or opinions, dated the ClosingDate and addressed to the Representative, with respect to the issuance and saleof the Securities, the Registration Statement, the Disclosure Package, theFinal Prospectus (together with any supplement thereto) and other relatedmatters as the Representative may reasonably require, and the Company shallhave furnished to such counsel such documents as they request for the purposeof enabling them to pass upon such matters.

 

(h)           TheCompany shall have furnished to the Representative a certificate of theCompany, signed by the Chairman of the Board or the President and the principalfinancial or accounting officer of the Company, dated the Closing Date, to theeffect that the signers of such certificate have carefully examined theRegistration Statement, the Final Prospectus, the Disclosure Package and anyamendments or supplements thereto, as well as each electronic roadshow used inconnection with the offering of the Securities, and this Agreement and that:

 

(i)            therepresentations and warranties of the Company in this Agreement are true andcorrect on and as of the Closing Date with the same effect as if made on theClosing Date and the Company has complied with all the agreements and satisfiedall the conditions on its part to be performed or satisfied at or prior to theClosing Date;

 

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(ii)           nostop order suspending the effectiveness of the Registration Statement or anynotice objecting to its use has been issued and no proceedings for that purposehave been instituted or, to the Company’s knowledge, threatened; and

 

(iii)          sincethe date of the most recent financial statements included or incorporated byreference in the Final Prospectus (exclusive of any supplement thereto), therehas been no material adverse effect on the condition (financial or otherwise),prospects, earnings, business or properties of the Company and itssubsidiaries, taken as a whole, whether or not arising from transactions in theordinary course of business, except as set forth in or contemplated in theDisclosure Package and the Final Prospectus (exclusive of any supplementthereto).

 

(i)            The Company shall have requested andcaused PricewaterhouseCoopers LLP to have furnished to the Representative, atthe Execution Time and at the Closing Date, a letter, dated respectively as ofthe Execution Time and as of the Closing Date, in form and substancesatisfactory to the Representative.

 

(j)            Subsequent to the Execution Time or,if earlier, the dates as of which information is given in the RegistrationStatement (exclusive of any amendment thereof) and the Final Prospectus(exclusive of any supplement thereto), there shall not have been (i) anychange or decrease specified in the letter or letters referred to inparagraph (h) of this Section 6 or (ii) any change, or anydevelopment involving a prospective change, in or affecting the condition(financial or otherwise), prospects, earnings, business or properties of theCompany and its subsidiaries taken as a whole, whether or not arising fromtransactions in the ordinary course of business, except as set forth in orcontemplated in the Disclosure Package and the Final Prospectus (exclusive ofany supplement thereto) the effect of which, in any case referred to inclause (i) or (ii) above, is, in the sole judgment of the Representative,so material and adverse as to make it impractical or inadvisable to proceedwith the offering or delivery of the Securities as contemplated by theRegistration Statement (exclusive of any amendment thereof), the DisclosurePackage and the Final Prospectus (exclusive of any supplement thereto).

 

(k)           Prior to the Execution Time,the Company shall have furnished to the Representative a letter substantiallyin the form of Exhibit A hereto from each officer and director of the Companyand addressed to the Representative.

 

(l)            Subsequent to the Execution Time,there shall not have been any decrease in the rating of any of the Company’sdebt securities by any “nationally recognized statistical rating organization”(as defined for purposes of Rule 436(g) under the Act) or any notice given ofany intended or potential decrease in any such rating or of a possible changein any such rating that does not indicate the direction of the possible change

 

(m)          Prior to the Closing Date, the Companyshall have furnished to the Representative such further information, certificatesand documents as the Representative may reasonably request.

 

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If any of the conditions specified in thisSection 6 shall not have been fulfilled when and as provided in thisAgreement, or if any of the opinions and certificates mentioned above orelsewhere in this Agreement shall not be reasonably satisfactory in form andsubstance to the Representative and counsel for the Underwriters, thisAgreement and all obligations of the Underwriters hereunder may be canceled at,or at any time prior to, the Closing Date by the Representative. Notice of suchcancellation shall be given to the Company in writing or by telephone orfacsimile confirmed in writing.

 

The documents required to be delivered by thisSection 6 shall be delivered at the office of Cleary Gottlieb Steen & Hamilton LLP, counsel for theUnderwriters, at One Liberty Plaza, NewYork, NY 10006, on the Closing Date.

 

7.             Reimbursement of Underwriters’ Expenses. If thesale of the Securities provided for herein is not consummated because anycondition to the obligations of the Underwriters set forth in Section 6hereof is not satisfied, because of any termination pursuant to Section 10hereof or because of any refusal, inability or failure on the part of theCompany to perform any agreement herein or comply with any provision hereofother than by reason of a default by any of the Underwriters, the Company willreimburse the Underwriters severally through Harris Nesbitt Corp. on demand forall expenses (including reasonable fees and disbursements of counsel) thatshall have been incurred by them in connection with the proposed purchase andsale of the Securities.

 

8.             Indemnification and Contribution. (a)  The Company agrees to indemnify and holdharmless each Underwriter, the directors, officers, employees and agents ofeach Underwriter and each person who controls any Underwriter within themeaning of either the Act or the Exchange Act against any and all losses,claims, damages or liabilities, joint or several, to which they or any of themmay become subject under the Act, the Exchange Act or other U.S. federal orstate statutory law or regulation, at common law or otherwise, insofar as suchlosses, claims, damages or liabilities (or actions in respect thereof) ariseout of or are based upon any untrue statement or alleged untrue statement of amaterial fact contained in the registration statement for the registration ofthe Securities as originally filed or in any amendment thereof, or in the BaseProspectus, any Preliminary Prospectus, or any other preliminary prospectussupplement relating to the Securities, the Final Prospectus or any Issuer FreeWriting Prospectus, or in any amendment thereof or supplement thereto, or ariseout of or are based upon the omission or alleged omission to state therein amaterial fact required to be stated therein or necessary to make the statementstherein not misleading, and agrees to reimburse each such indemnified party, asincurred, for any legal or other expenses reasonably incurred by them inconnection with investigating or defending any such loss, claim, damage,liability or action; provided, however, that the Company will notbe liable in any such case to the extent that any such loss, claim, damage or liabilityarises out of or is based upon any such untrue statement or alleged untruestatement or omission or alleged omission made therein in reliance upon and inconformity with written information furnished to the Company by or on behalf ofany Underwriter through the Representative specifically for inclusion therein.This indemnity agreement will be in addition to any liability that the Companymay otherwise have.

 

(b)           Each Underwriter severally and not jointly agreesto indemnify and hold harmless the Company, each of its directors, each of itsofficers who signs the

 

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RegistrationStatement, and each person who controls the Company within the meaning ofeither the Act or the Exchange Act, to the same extent as the foregoingindemnity from the Company to each Underwriter, but only with reference towritten information relating to such Underwriter furnished to the Company by oron behalf of such Underwriter through the Representative specifically for inclusionin the documents referred to in the foregoing indemnity. This indemnityagreement will be in addition to any liability that any Underwriter mayotherwise have. The Company acknowledges that the statements set forth (i) inthe last paragraph of the cover page regarding delivery of the Securities and(ii) under the heading “Underwriting,” the 16th paragraph in the PreliminaryProspectus and the Final Prospectus constitute the only information furnishedin writing by or on behalf of the several Underwriters for inclusion in anyPreliminary Prospectus, the Final Prospectus and any Issuer Free WritingProspectus.

 

(c)           Promptlyafter receipt by an indemnified party under this Section 8 of notice ofthe commencement of any action, such indemnified party will, if a claim inrespect thereof is to be made against the indemnifying party under thisSection 8, notify the indemnifying party in writing of the commencementthereof; but the failure so to notify the indemnifying party (i) will notrelieve it from liability under paragraph (a) or (b) above unless andto the extent it did not otherwise learn of such action and such failureresults in the forfeiture by the indemnifying party of substantial rights anddefenses and (ii) will not, in any event, relieve the indemnifying partyfrom any obligations to any indemnified party other than the indemnificationobligation provided in paragraph (a) or (b) above. The indemnifying partyshall be entitled to appoint counsel (including local counsel) of theindemnifying party’s choice at the indemnifying party’s expense to representthe indemnified party in any action for which indemnification is sought (inwhich case the indemnifying party shall not thereafter be responsible for thefees and expenses of any separate counsel, other than local counsel if notappointed by the indemnifying party, retained by the indemnified party orparties except as set forth below); provided, however, that suchcounsel shall be satisfactory to the indemnified party. Notwithstanding theindemnifying party’s election to appoint counsel (including local counsel) torepresent the indemnified party in an action, the indemnified party shall havethe right to employ separate counsel (including local counsel), and theindemnifying party shall bear the reasonable fees, costs and expenses of suchseparate counsel if (i) the use of counsel chosen by the indemnifyingparty to represent the indemnified party would present such counsel with aconflict of interest, (ii) the actual or potential defendants in, or targetsof, any such action include both the indemnified party and the indemnifyingparty and the indemnified party shall have reasonably concluded that there maybe legal defenses available to it and/or other indemnified parties that aredifferent from or additional to those available to the indemnifying party,(iii) the indemnifying party shall not have employed counsel satisfactoryto the indemnified party to represent the indemnified party within a reasonabletime after notice of the institution of such action or (iv) theindemnifying party shall authorize the indemnified party to employ separatecounsel at the expense of the indemnifying party. An indemnifying party willnot, without the prior written consent of the indemnified parties, settle or compromiseor consent to the entry of any judgment with respect to any pending orthreatened claim, action, suit or proceeding in respect of whichindemnification or contribution may be

 

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soughthereunder (whether or not the indemnified parties are actual or potentialparties to such claim or action) unless such settlement, compromise or consentincludes an unconditional release of each indemnified party from all liabilityarising out of such claim, action, suit or proceeding.

 

(d)           Inthe event that the indemnity provided in paragraph (a) or (b) of thisSection 8 is unavailable to or insufficient to hold harmless anindemnified party for any reason, the Company and the Underwriters severallyagree to contribute to the aggregate losses, claims, damages and liabilities(including legal or other expenses reasonably incurred in connection withinvestigating or defending any loss, claim, damage, liability or action)(collectively “Losses”) to which the Company and one or more of theUnderwriters may be subject in such proportion as is appropriate to reflect therelative benefits received by the Company on the one hand and by theUnderwriters on the other from the offering of the Securities; provided,however, that in no case shall any Underwriter be responsible for anyamount in excess of the underwriting discount or commission applicable to theSecurities purchased by such Underwriter hereunder. If the allocation providedby the immediately preceding sentence is unavailable for any reason, theCompany and the Underwriters severally shall contribute in such proportion asis appropriate to reflect not only such relative benefits but also the relativefault of the Company on the one hand and of the Underwriters on the other inconnection with the statements or omissions which resulted in such Losses aswell as any other relevant equitable considerations. Benefits received by theCompany shall be deemed to be equal to the total net proceeds from the offering(before deducting expenses) received by it, and benefits received by theUnderwriters shall be deemed to be equal to the total underwriting discountsand commissions, in each case as set forth on the cover page of the FinalProspectus. Relative fault shall be determined by reference to, among otherthings, whether any untrue or any alleged untrue statement of a material factor the omission or alleged omission to state a material fact relates toinformation provided by the Company on the one hand or the Underwriters on theother, the intent of the parties and their relative knowledge, access toinformation and opportunity to correct or prevent such untrue statement oromission. The Company and the Underwriters agree that it would not be just andequitable if contribution were determined by pro rata allocation or any othermethod of allocation that does not take account of the equitable considerationsreferred to above. Notwithstanding the provisions of this paragraph (d),no person guilty of fraudulent misrepresentation (within the meaning ofSection 11(f) of the Act) shall be entitled to contribution from anyperson who was not guilty of such fraudulent misrepresentation. For purposes ofthis Section 8, each person who controls an Underwriter within the meaningof either the Act or the Exchange Act and each director, officer, employee,Affiliate and agent of an Underwriter shall have the same rights tocontribution as such Underwriter, and each person who controls the Companywithin the meaning of either the Act or the Exchange Act, each officer of theCompany who shall have signed the Registration Statement and each director ofthe Company shall have the same rights to contribution as the Company, subjectin each case to the applicable terms and conditions of this paragraph (d).

 

9.             Default by an Underwriter. If any one or moreUnderwriters shall fail to purchase and pay for any of the Securities agreed tobe purchased by such Underwriter or

 

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Underwriters hereunder and such failure to purchaseshall constitute a default in the performance of its or their obligations underthis Agreement, the remaining Underwriters shall be obligated severally to takeup and pay for (in the respective proportions which the amount of Securities setforth opposite their names in Schedule I hereto bears to the aggregateamount of Securities set forth opposite the names of all the remainingUnderwriters) the Securities which the defaulting Underwriter or Underwritersagreed but failed to purchase; provided, however, that in theevent that the aggregate amount of Securities which the defaulting Underwriteror Underwriters agreed but failed to purchase shall exceed 10% of the aggregateamount of Securities set forth in Schedule I hereto, the remaining Underwritersshall have the right to purchase all, but shall not be under any obligation topurchase any, of the Securities, and if such nondefaulting Underwriters do notpurchase all the Securities, this Agreement will terminate without liability toany nondefaulting Underwriter or the Company. In the event of a default by anyUnderwriter as set forth in this Section 9, the Closing Date shall bepostponed for such period, not exceeding five Business Days, as theRepresentative shall determine in order that the required changes in theRegistration Statement and the Final Prospectus or in any other documents orarrangements may be effected. Nothing contained in this Agreement shall relieveany defaulting Underwriter of its liability, if any, to the Company and anynondefaulting Underwriter for damages occasioned by its default hereunder.

 

10.           Termination. This Agreementshall be subject to termination in the absolute discretion of theRepresentative, by notice given to the Company prior to delivery of and paymentfor the Securities, if at any time prior to such time (i) trading in theCompany’s Ordinary Shares shall have been suspended by the Commission or theAmerican Stock Exchange or trading in securities generally on the New YorkStock Exchange or the American Stock Exchange shall have been suspended orlimited or minimum prices shall have been established on such Exchange,(ii) a banking moratorium shall have been declared either by U.S. federalor New York State authorities or (iii) there shall have occurred anyoutbreak or escalation of hostilities, declaration by the United States of anational emergency or war, or other calamity or crisis the effect of which onfinancial markets is such as to make it, in the sole judgment of theRepresentative, impractical or inadvisable to proceed with the offering ordelivery of the Securities as contemplated by any Preliminary Prospectus or theFinal Prospectus (exclusive of any amendment or supplement thereto).

 

11.           Representations and Indemnities toSurvive. The respective agreements, representations, warranties,indemnities and other statements of the Company or its officers and of theUnderwriters set forth in or made pursuant to this Agreement will remain infull force and effect, regardless of any investigation made by or on behalf ofany Underwriter or the Company or any indemnified persons referred to inSection 8 hereof, and will survive delivery of and payment for theSecurities. The provisions of Sections 7 and 8 hereof shall survive thetermination or cancellation of this Agreement.

 

12.           Notices. All communicationshereunder will be in writing and effective only on receipt, and, if sent to theRepresentative, will be mailed, delivered or telefaxed to the Harris NesbittCorp. General Counsel (fax no.: (212) 702-1205) and confirmed to theGeneral Counsel, Harris Nesbitt Corp., at 3 Times Square, New York, NY 10036,Attention:  General Counsel; or, if sentto the Company, will be mailed, delivered or telefaxed to Mark Lettes, ChiefFinancial Officer (fax no.: (303) 839-5907 and confirmed to it at Apex SilverMines Limited c/o

 

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Apex Silver Mines Corporation, 1700 Lincoln Street,Suite 3050, Denver, Colorado 80203, Attention: Mark Lettes, Chief Financial Officer.

 

13.           Successors. This Agreementwill inure to the benefit of and be binding upon the parties hereto and theirrespective successors, the indemnified persons referred to in Section 8hereof and their respective successors, and no other person will have any rightor obligation hereunder.

 

14.           No Fiduciary Duty. The Companyhereby acknowledges that (a) the purchase and sale of the Securities pursuantto this Agreement is an arm’s-length commercial transaction between theCompany, on the one hand, and the Underwriters and any affiliate through whichit may be acting, on the other, (b) the Underwriters are acting as principaland not as an agent or fiduciary of the Company and (c) the Company’sengagement of the Underwriters in connection with the offering and the process leadingup to the offering is as independent contractors and not in any other capacity.Furthermore, the Company agrees that it is solely responsible for making itsown judgments in connection with the offering (irrespective of whether any ofthe Underwriters has advised or is currently advising the Company on related orother matters). The Company agrees that it will not claim that the Underwritershave rendered advisory services of any nature or respect, or owe an agency,fiduciary or similar duty to the Company, in connection with such transactionor the process leading thereto.

 

15.           Applicable Law. This Agreementwill be governed by and construed in accordance with the laws of the State ofNew York applicable to contracts made and to be performed within the State ofNew York. The parties hereto each hereby waive any right to trial by jury inany action, proceeding or counterclaim arising out of or relating to thisAgreement.

 

16.           Consent to Jurisdiction; Service of Process. The Company hereby (a) submitsto the non-exclusive jurisdiction of the courts of the State of New York locatedin the City and County of New York and the United States District Court for theSouthern District of New York (collectively, the “New York Courts” and each, a “New York Court”)with respect to any actions and proceedings arising out of or relating to thisAgreement and hereby consents to personal service with respect thereto,(b) agrees that all claims with respect to such actions or proceedings maybe heard and determined in such New York Courts, (c) waives the defense of aninconvenient forum, and (d) agrees not to commence, prosecute or continue anyaction or proceeding relating to this Agreement other than in a New York Court.

 

17.           Counterparts. This Agreementmay be signed in one or more counterparts, each of which shall constitute anoriginal and all of which together shall constitute one and the same agreement.

 

18.           Headings. The section headingsused herein are for convenience only and shall not affect the constructionhereof.

 

19.           Definitions. The terms thatfollow, when used in this Agreement, shall have the meanings indicated.

 

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“Act” shall mean the Securities Act of 1933, asamended, and the rules and regulations of the Commission promulgatedthereunder.

 

“Affiliate” shall have the meaning specified in Rule501(b) of Regulation D.

 

“Base Prospectus” shall mean the base prospectusreferred to in paragraph 1(a) above contained in the Registration Statement atthe Execution Time.

 

“Business Day” shall mean any day other than aSaturday, a Sunday or a legal holiday or a day on which banking institutions ortrust companies are authorized or obligated by law to close in The City of NewYork.

 

“Code” shall mean the Internal Revenue Code of 1986,as amended.

 

“Commission” shall mean the Securities and ExchangeCommission.

 

“Disclosure Package” shall mean (i) the BaseProspectus, (ii) the Preliminary Prospectus used most recently prior to theExecution Time, (iii) the Issuer Free Writing Prospectuses, if any, identifiedin Schedule II hereto, and (iv) any other Free Writing Prospectus that theparties hereto shall hereafter expressly agree in writing to treat as part ofthe Disclosure Package.

 

“Effective Date” shall mean each date and time thatthe Registration Statement, any post-effective amendment or amendments theretobecame or become effective.

 

“Exchange Act” shall mean the Securities Exchange Actof 1934, as amended, and the rules and regulations of the Commission promulgatedthereunder.

 

“Execution Time” shall mean the date and time thatthis Agreement is executed and delivered by the parties hereto.

 

“Final Prospectus” shall mean the prospectussupplement relating to the Securities that was first filed pursuant to Rule 424(b)after the Execution Time, together with the Base Prospectus.

 

“Free Writing Prospectus” shall mean a free writingprospectus, as defined in Rule 405.

 

“Investment Company Act” shall mean the InvestmentCompany Act of 1940, as amended, and the rules and regulations of theCommission promulgated thereunder.

 

“Issuer Free Writing Prospectus” shall mean an issuerfree writing prospectus, as defined in Rule 433.

 

“Preliminary Prospectus” shall mean any preliminaryprospectus supplement to the Base Prospectus referred to in paragraph 1(a)above which is used prior to the filing of the Final Prospectus, together withthe Base Prospectus.

 

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“Registration Statement” shall mean the registrationstatement referred to in paragraph 1(a) above, including exhibits and financialstatements and any prospectus supplement relating to the Securities that isfiled with the Commission pursuant to Rule 424(b) and deemed part of suchregistration statement pursuant to Rule 430B, as amended at the Execution Timeand, in the event any post-effective amendment thereto or any Rule 462(b)Registration Statement becomes effective prior to the Closing Date, shall alsomean such registration statement as so amended or any such Rule 462(b)Registration Statement.

 

“Regulation D” shall mean Regulation D underthe Act.

 

“Rule 158”, “Rule 163”, “Rule 164”, “Rule 172”, “Rule405”, “Rule 415”, “Rule 424”, “Rule 430B”, “Rule 433” and “Rule462(b)” refer to such rules under the Act.

 

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If the foregoing is in accordance with yourunderstanding of our agreement, please sign and return to us the enclosedduplicate hereof, whereupon this letter and your acceptance shall represent abinding agreement between the Company and the several Underwriters.

 
|   | Very truly yours,                            |
|--------|----------------------------------------------|
|   |
|   | APEX SILVER MINES LIMITED                    |
|   |
|   | By:                                          | /s/ Mark A. Lettes |   |
|   | Name: Mark A. Lettes                         |
|   | Title: Senior VP and Chief Financial Officer |

 

The foregoing Agreement is hereby

confirmed and accepted as of the

date first above written.

 
| By:    | HARRIS NESBITT CORP.,                             |   |
|--------|---------------------------------------------------|--------|
|   | acting severally for itself and the other several |   |
|   | Underwriters named in Schedule I.                 |   |
|   |                                              |
| By:    | /s/ Michael S. Vitton                             |   |   |
|   | Name: Michael S. Vitton                           |   |
|   | Title: Executive Managing Director                |   |
|        |                                                   |        |  |  |

 

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SCHEDULE I

 
| **Underwriters**     | ** ** | **Number of Securities  to be Purchased** | ** ** |
|----------------------|------------|---------------------------------------------------------------|------------|
| Harris Nesbitt Corp. |       | 6,375,000                                                     |       |
|                 |       |                                                          |       |
| Total                |       | 6,375,000                                                     |       |

 

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SCHEDULE II

 

Schedule of Free Writing Prospectuses included in the DisclosurePackage

 

2

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| **[Form of Lock-Up Agreement]** | **EXHIBIT A** |
|---------------------------------|---------------|

 

**[Letterhead ofofficer, director or major shareholder of**

**APEX SILVER MINESLIMITED**

** **

APEX SILVER MINES LIMITED

Public Offering of Ordinary Shares

 

, 2006

 

HarrisNesbitt Corp.

AsRepresentative of the several Underwriters

c/oHarris Nesbitt Corp.

3Times Square

NewYork, NY 10036

 

Ladiesand Gentlemen:

 

This letter is being delivered to you in connectionwith the proposed Underwriting Agreement (the “Underwriting Agreement”),between Apex Silver Mines Limited, a Cayman Islands company (the “Company”),and you as representative of a group of Underwriters named therein, relating toan underwritten public offering of Ordinary Shares, $.01 par value (the “OrdinaryShares”), of the Company.

 

In order to induce you and the other Underwriters toenter into the Underwriting Agreement, the undersigned will not, without theprior written consent of Harris Nesbitt Corp., directly or indirectly, offer,sell, contract to sell, pledge or otherwise dispose of (or enter into anytransaction which is designed to, or might reasonably be expected to, result inthe disposition (whether by actual disposition or effective economicdisposition due to cash settlement or otherwise) by the undersigned or anyaffiliate of the undersigned or any person in privity with the undersigned orany affiliate of the undersigned of, file (or participate)), directly orindirectly, including the filing (or participation in the filing) of a registrationstatement with the Securities and Exchange Commission in respect of, orestablish or increase a put equivalent position or liquidate or decrease a callequivalent position within the meaning of Section 16 of the Securities ExchangeAct of 1934, as amended, and the rules and regulations of the Securities andExchange Commission promulgated thereunder with respect to, any shares ofcapital stock of the Company or any securities convertible into, or exercisableor exchangeable for such capital stock, or publicly announce an intention toeffect any such transaction, for a period of 90 days after the date of theUnderwriting Agreement. Notwithstanding the foregoing, the undersigned may (1)transfer any or all of the shares of capital stock of the Company or anysecurities convertible into, or exercisable or exchangeable for such capitalstock by gift, will or intestacy; provided, however, that in anysuch case it shall be a condition to the transfer that the transferee executean agreement stating that the transferee is receiving and holding thesecurities subject to the provisions of this letter, and there shall be nofurther transfer of such securities except in accordance with this letter; and(2) in the case of an officer or director of the Company, dispose up to 175,000Ordinary Shares (however, the total disposition by the officers and directorsof the Company as a group shall not exceed an aggregate of 175,000 OrdinaryShares); provided that

 

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the undersigned may not make any disposition ofOrdinary Shares pursuant to this clause (2) until at least 30 days after thedate of the Underwriting Agreement.

 

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If for any reason the Underwriting Agreement shall beterminated prior to the Closing Date (as defined in the UnderwritingAgreement), the agreement set forth above shall likewise be terminated.

 
|   | Yours very truly, |
|--------|-------------------|
|   |
|   |
|   | By:               |   |   |
|   | Name:             |
|   | Title:            |

 

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**ANNEX A**

 

**Significant Subsidiaries**

 
| Apex Luxembourg S.a.r.l.      |   | Luxembourg  |
|-------------------------------|--------|-------------|
| Apex Silver Mines Sweden AB   |   | Sweden      |
| Apex Metals GmbH              |   | Switzerland |
| Minera San Cristobal S.A.     |   | Bolivia     |
| Apex Silver Mines Corporation |   | Delaware    |

 

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**ANNEX B**

 

**Officers**

 

Jeffrey G. Clevenger

Alan R. Edwards

Mark A. Lettes

Robert P. Vogels

 

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**ANNEX C**

 

**Warrants**

 

Placement Agent Warrant dated January 28, 2004 for 228,000 OrdinaryShares issued to Nathan A. Low.

 

Placement Agent Warrant dated January 28, 2004 for 72,000 OrdinaryShares issued to Sunrise Securities Corp.

 

Placement Agent Warrant dated January 28, 2004 for 50,000 OrdinaryShares issued to Robert Newman Jr.

 

Warrant dated March 29, 2004 for 10,000 Ordinary Shares issued to JayRodin.

 

Warrant dated March 29, 2004 for 5,000 Ordinary Shares issued to EricAbitbol.

 

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