Document:

Execution Copy

                     AMENDED AND RESTATED COLLATERAL PLEDGE
                             AND SECURITY AGREEMENT

                          Dated as of December 14, 2004

                                      among

                           APEX SILVER MINES LIMITED,
                                   as Pledgor,

                              THE BANK OF NEW YORK
                                   as Trustee,

                                       and

                              THE BANK OF NEW YORK
                               as Collateral Agent

      This Amended and Restated Collateral Pledge and Security Agreement (as
amended, restated or otherwise supplemented from time to time, this "Pledge
Agreement") is made and entered into as of December 14, 2004 among APEX SILVER
MINES LIMITED, a Cayman Islands company (the "Pledgor"), having its principal
offices at 1700 Lincoln Street, Denver, Colorado 80203, THE BANK OF NEW YORK, a
New York banking corporation, having its principal corporate trust office at 101
Barclay Street, Floor 8 West, New York, New York 10286, as trustee (in such
capacity, the "Trustee") for the holders from time to time (the "Holders") of
the Notes (as defined herein) issued by the Pledgor under the Indenture referred
to below, and THE BANK OF NEW YORK, as collateral agent for the Trustee and the
holders from time to time of the Notes referred to below (in such capacity, the
"Collateral Agent") and securities intermediary (the "Securities Intermediary").

                                   WITNESSETH:

      WHEREAS, the Pledgor and The Bank of New York, as Trustee, have entered
into that certain Collateral Pledge and Security Agreement dated as of October
15, 2004 (the "Original Agreement");

      WHEREAS, the Pledgor and The Bank of New York, as Trustee, have entered
into that certain indenture dated as of October 15, 2004 (as amended, restated,
supplemented or otherwise modified from time to time, the "Indenture");

      WHEREAS, Section 14.01(a) of the Indenture provides that the Original
Agreement may be amended from time to time in writing by the parties thereto,
provided that no amendment that would materially adversely affect the rights of
the Holders may be effected without the consent of each Holder affected thereby;

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      WHEREAS, the amendments contemplated by this Pledge Agreement would not
materially adversely affect the rights of any Holders under the Original
Agreement;

      WHEREAS, the Company and the Trustee, as parties under the Original
Agreement, desire to and hereby amend and restate the terms of the Original
Agreement in its entirety as follows;

      WHEREAS, the Pledgor and Citigroup Global Markets Inc., Barclays Bank PLC,
Deutsche Bank Securities Inc., Harris Nesbitt Corp. and Sunrise Securities Corp.
(collectively, the "Initial Purchasers") are parties to a Purchase Agreement,
dated October 11, 2004 (the "Purchase Agreement"), pursuant to which the Pledgor
has issued and sold to the Initial Purchasers $100,000,000 aggregate principal
amount of 4.0% Convertible Senior Subordinated Notes due 2024 (the "Initial
Notes") and pursuant to which the Pledgor is issuing and selling on the date
hereof to the Initial Purchasers $39,987,000 aggregate principal amount of 4.0%
Convertible Senior Subordinated Notes due 2024 being issued pursuant to the
Initial Purchasers' option set forth in the Purchase Agreement (the "Option
Notes" and, together with the Initial Notes, the "Notes");

      WHEREAS, the Pledgor has been issuing the Notes pursuant to the Indenture;

      WHEREAS, pursuant to the Indenture, the Pledgor is required to purchase
and pledge to the Collateral Agent for the benefit of the Trustee and for the
ratable benefit of the Holders, on each Issue Date (as defined in the Indenture)
U.S. dollars in cash or U.S. Government Obligations (as defined in the
Indenture) in an amount that will be sufficient upon receipt of scheduled
interest and principal payments of such securities to provide for payment in
full of the first six scheduled interest payments due on the Notes (such
obligation, together with the obligation to repay the principal, premium, if
any, interest, fees, expenses or other amounts on the Notes and under the
Indenture, this Agreement and any other transaction document related thereto in
the event that the Notes become due and payable prior to such time as the first
six scheduled interest payments thereon shall have been paid in full, being
collectively referred to herein as the "Obligations");

      WHEREAS, the Pledgor has established a securities account (the "Collateral
Account") with The Bank of New York, at its office at 101 Barclay Street, Floor
8 West, New York, New York, in the name of The Bank of New York, as Collateral
Agent for the benefit of the Trustee and the ratable benefit of the Holders of
the Notes, designated as "APEX SILVER MINES - 4% CONV SR SUB NTS COLLATERAL
A/C"; and

      WHEREAS, to induce the Initial Purchasers to purchase the Notes pursuant
to the Purchase Agreement, the Pledgor agreed to apply certain of the proceeds
of the offering of the Notes to purchase the Pledged Securities (as defined
below) and deposit or cause to be deposited the Pledged Securities into the
Collateral Account to be held therein subject to the terms of this Pledge
Agreement and shall have granted the assignment and security interest and made
the pledge and assignment contemplated by this Pledge Agreement.

      NOW, THEREFORE, in consideration of the premises herein contained, and in
order to induce the Initial Purchasers to purchase the Notes, the Pledgor, the
Trustee and the Collateral Agent hereby agree, for the benefit of the Initial
Purchasers and for the ratable benefit of the Holders, as follows:

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<PAGE>

            Section 1. Definitions; Appointment; Deposit and Investment.

            1.1. Definitions.

            (a) Unless otherwise defined in this Pledge Agreement, terms defined
or referenced in the Indenture are used in this Pledge Agreement as such terms
are defined or referenced therein.

            (b) Unless otherwise defined in the Indenture or in this Pledge
Agreement, terms defined in Article 8 or 9 of the Uniform Commercial Code in
effect in the State of New York ("N.Y. Uniform Commercial Code") from time to
time and/or in Section 357.2 of the Treasury Regulations (as defined herein) are
used in this Pledge Agreement as such terms are defined in such Article 8 or 9
and/or such Section 357.2.

            (c) In this Pledge Agreement, the following terms have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):

      "Additional Pledged Securities" has the meaning specified in Section 1.3
hereof.

      "Cash Equivalents" means U.S. dollar-denominated investments in money
market accounts or funds whose investments have a weighted average maturity of
90 days or less.

      "C.F.R." means U.S. Code of Federal Regulations.

      "Collateral" has the meaning specified in Section 1.3 hereof.

      "Collateral Account" has the meaning specified in the recitals of the
parties hereof.

      "Collateral Agent" has the meaning specified in the introductory paragraph
hereto.

      "Collateral Investments" has the meaning specified in Section 4(b) hereof.

      "Entitlement Holder" has the meaning specified in N.Y. Uniform Commercial
Code Section 8-102(a)(7) or, in respect of any book-entry security, the meaning
specified for "Entitlement Holder" in 31 C.F.R. Section 357.2.

      "FRBNY" means Federal Reserve Bank of New York.

      "FRBNY Account" means the FRBNY Member Securities Account maintained in
the name of the Securities Intermediary by the FRBNY.

      "FRBNY Member" means any Person that is eligible to maintain (and that
maintains) with the FRBNY one or more FRBNY Member Securities Accounts in such
Person's name.

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<PAGE>

      "FRBNY Member Securities Account" means, in respect of any Person, an
account in the name of such Person at the FRBNY, to which account U.S.
Government Obligations held for such Person are or may be credited.

      "Holders" has the meaning specified in the introductory paragraph hereto.

      "Initial Notes" has the meaning specified in the recitals of the parties
hereof.

      "Initial Purchasers" has the meaning specified in the recitals of the
parties hereof.

      "Initial Pledged Securities" has the meaning specified in Section 1.3
hereof.

      "Notes" has the meaning specified in the recitals of the parties hereof.

      "N.Y. Uniform Commercial Code" has the meaning specified in Section
1.1(b).

      "Obligations" has the meaning specified in the recitals of the parties
hereof.

      "Option Closing Date" means the date on which this Amended and Restated
Collateral Pledge and Security Agreement is made and entered into, as specified
in the introductory paragraph hereto.

      "Option Notes" has the meaning specified in the recitals of the parties
hereof.

      "Purchase Agreement" has the meaning specified in the recitals of the
parties hereof.

      "Pledged Securities" has the meaning specified in Section 1.3 hereof.

      "Pledgor" has the meaning specified in the introductory paragraph hereto.

      "Securities Intermediary" means a Person that is a "securities
intermediary" (as defined in N.Y. Uniform Commercial Code Section 8-l02(a)(14))
and, in respect of any book-entry security, a "Securities Intermediary" (as
defined in 31 C.F.R. Section 357.2).

      "Security" has the meaning specified in Section 8-102(a)(l5) of the N.Y.
Uniform Commercial Code or, in respect of any book-entry security, has the
meaning specified for "Security" in 31 C.F.R. Section 357.2.

      "Security Entitlement" has the meaning specified in N.Y. Uniform
Commercial Code Section 8-l02(a)(17) or, in respect of any book-entry security,
has the meaning specified for "Security Entitlement" in 31 C.F.R. Section 357.2.

      "Settlement Date" means, as to any U.S. Government Obligations, the date
on which the purchase of such U.S. Government Obligations shall have been
settled.

      "Termination Date" means the earlier of (a) the date of the payment in
full in cash of each of the first six scheduled interest payments due on the
Notes under the terms of the Indenture and (b) the date of the payment in full
in cash of all obligations due and owing under this Pledge Agreement, the
Indenture and the Notes, in the event such obligations become due and payable
prior to the payment of the first six scheduled interest payments on the Notes.

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<PAGE>

      "Treasury Regulations" means (a) the federal regulations contained in 31
C.F.R. Part 357 (including, without limitation, Section 357.10 through Section
357.14 and Section 357.41 through Section 357.44 of 31 C.F.R.).

      "Trustee" has the meaning specified in the introductory paragraph hereto.

      "Uncertificated Security" has the meaning specified in Section
8-l02(a)(l8) of the N.Y. Uniform Commercial Code.

            1.2. Appointment of the Collateral Agent. The Trustee hereby
appoints The Bank of New York as Collateral Agent in accordance with the terms
and conditions set forth herein and the Collateral Agent hereby accepts such
appointment.

            1.3. Pledge and Grant of Security Interest. As security for the
prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations, the Pledgor hereby
assigns and pledges to the Collateral Agent for the benefit of the Trustee and
the ratable benefit of the Holders and hereby grants to the Collateral Agent for
the benefit of the Trustee and for the ratable benefit of the Holders, a lien on
and security interest in all of the Pledgor's right, title and interest in, to
and under the following property: (a) the U.S. Government Obligations identified
by CUSIP No. in Schedule I to this Pledge Agreement (the "Initial Pledged
Securities"); (b) the U.S. Government Obligations identified by CUSIP No. in
Schedule II to this Pledge Agreement (the "Additional Pledged Securities" and,
together with the Initial Pledged Securities, the "Pledged Securities"); (c) the
security entitlements relating thereto; (d) the Collateral Account, all
financial assets and security entitlements from time to time carried in the
Collateral Account and all funds held therein; (e) all Cash Equivalents from
time to time credited to the Collateral Account or otherwise held in the name of
the Collateral Agent, and all security entitlements to the Cash Equivalents and
any money market deposit accounts or money market securities accounts relating
to or constituting any Cash Equivalent credited to the Collateral Account or
otherwise held in the name of the Collateral Agent; (f) all notes, certificates
of deposit, deposit accounts, checks and other instruments, if any, from time to
time hereafter delivered to or otherwise possessed by the Collateral Agent for
or on behalf of the Pledgor and specifically designated by the Pledgor to
constitute Collateral or to be in substitution for any or all of the then
existing Collateral; (g) all certificates and instruments, if any, from time to
time representing or evidencing the Collateral Account, the Pledged Securities
and Cash Equivalent; (h) all interest, dividends, cash, instruments and other
property, if any, from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the then existing
Collateral; and (i) all proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds that constitute property of the types
described in clauses (a) through (h) of this Section 1.3 and, to the extent not
otherwise included, all (i) payments under insurance (whether or not the Trustee
is the loss payee thereof) or any indemnity, warranty or guaranty payable by
reason of loss or damage to or otherwise with respect to any of the foregoing
Collateral and (ii) cash proceeds of any and all of the foregoing Collateral)
(such property described in clauses (a) through (i) of this Section 1.3 being
collectively referred to herein as the "Collateral"). Without limiting the

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<PAGE>

generality of the foregoing, this Pledge Agreement secures the payment of all
amounts that constitute part of the Obligations and would be owed by the Pledgor
to the Trustee under the Notes, the Indenture, this Pledge Agreement and any
other transaction documents related thereto but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Pledgor.

            Section 2. Establishment and Maintenance of the Collateral Account.

            (a) The Collateral Agent has established the Collateral Account on
its books as a separate account segregated from all other custodial or
collateral accounts at its office at The Bank of New York, 101 Barclay Street,
Floor 8 West, New York, New York. The Pledgor and the Collateral Agent will
maintain the Collateral Account as a securities account with the Securities
Intermediary in the State of New York. The following provisions shall apply to
the establishment and maintenance of the Collateral Account:

                  (i) The Collateral Agent shall cause the Collateral Account to
be, and the Collateral Account shall be, separate from all other accounts
maintained by the Securities Intermediary.

                  (ii) The Collateral Agent shall, in accordance with all
applicable laws, have sole dominion and control over the Collateral Account.

                  (iii) It shall be a term and condition of the Collateral
Account, and the Pledgor irrevocably instructs the Collateral Agent,
notwithstanding any other term or condition to the contrary in any other
agreement, that no amount (including interest on Collateral Investments) shall
be released to or for the account of, or withdrawn by or for the account of, the
Pledgor or any other Person except as expressly provided in this Pledge
Agreement.

            (b) On the Issue Date for the Initial Notes, the Pledgor transferred
to the Collateral Agent, the sum of U.S. $10,874,662.68, which amount was
sufficient for the purchase of the Initial Pledged Securities, by depositing all
such funds into the Collateral Account.

            (c) On the Option Closing Date, the Pledgor shall transfer, or cause
to be transferred, to the Collateral Agent $4,534,000 principal amount of U.S.
treasury securities.

            (d) The Collateral Account was, is and shall continue to be subject
to such applicable laws, and such applicable regulations of the Board of
Governors of the Federal Reserve System and of any other appropriate banking or
governmental authority, as may now or hereafter be in effect.

            Section 3. Delivery of Collateral. (a) As soon as practicably
possible after receipt of the amount referred to in Section 2(c) (and not later
than the Business Day following the Issue Date for the Option Notes), (i) the
Collateral Agent shall have purchased, and the Pledgor shall have provided all
instructions necessary or desirable for the Collateral Agent to purchase, for
credit to the Collateral Account, the U.S. Government Obligations listed on
Schedule I hereto, (ii) the Securities Intermediary shall have credited such
U.S. Government Obligations to the Collateral Account as Collateral hereunder,
and (iii) the Collateral Agent and the Securities Intermediary shall have
ensured that, on the Settlement Date of such U.S. Government Obligations, the
FRBNY indicates by book-entry that those U.S. Government Obligations being
settled on such date are credited to the FRBNY Account.

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<PAGE>

            (b) The Collateral Agent will, from time to time, direct the
Securities Intermediary to reinvest the proceeds of Collateral that may mature
or be sold in such Cash Equivalents as it may be directed in writing by the
Pledgor. Except as otherwise expressly permitted in Section 3(e) below, the
Securities Intermediary shall make all Collateral Investments in the name of The
Bank of New York and shall credit such Collateral Investments to the Collateral
Account as Collateral hereunder. Any such proceeds that the Pledgor directs the
Collateral Agent in writing not to reinvest in Collateral Investments shall be
held as funds in the Collateral Account.

            (c) The Pledgor has delivered to the Collateral Agent financing
statements in form acceptable for filing under the Uniform Commercial Codes of
the District of Columbia and of Colorado, covering the Collateral described in
this Pledge Agreement. The Pledgor has filed, or caused the filing of, the
financing statements and provide filed copies to the Collateral Agent.

            (d) Any Collateral consisting of cash shall be credited to and
maintained in the Collateral Account.

            (e) Any Collateral Investment consisting of a money market account
shall be made in the name of the Collateral Agent for the benefit of the Trustee
and the ratable benefit of the Holders or shall be made in the name of The Bank
of New York and credited by the Securities Intermediary to the Collateral
Account.

            (f) Any Collateral Investment consisting of an uncertificated
security, including without limitation, any interest in a money market fund,
shall be credited and maintained in the Collateral Account and the Securities
Intermediary shall have established itself as the registered owner on the books
of the issuer of such security.

            (g) Collateral consisting of a certificated security or instrument
shall be delivered to The Bank of New York, registered in the name of the Bank
of New York or specially indorsed in its name by an effective endorsement and
shall be credited by the Securities Intermediary to the Collateral Account.

            Section 4. Investing of Amounts in the Collateral Accounts. The
Collateral Agent shall advise the Pledgor if, at any time, any amounts shall
exist in the Collateral Account that are uninvested, and if directed in writing
by the Pledgor, the Collateral Agent will, subject to the provisions of Sections
5 and 12:

            (a) invest such amounts on deposit in the Collateral Accounts in
such Cash Equivalents in accordance with the procedures in Section 3 as the
Pledgor may select; and

            (b) invest interest paid on the Cash Equivalents referred to in
clause (a) above, and reinvest other proceeds of any such Cash Equivalents that
may mature or be sold, in each case, in such Cash Equivalents in the name of the
Collateral Agent as the Pledgor may select (the Cash Equivalents referred to in
clauses (a) and (b) above, together with the Pledged Securities, being
collectively referred to herein as "Collateral Investments"); provided, however,
that the amount in cash and Pledged Securities on deposit in the Collateral

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Account, collectively, at any time during the term of this Pledge Agreement, is
sufficient to provide for the payment in full of the remaining interest payments
at such time on the Notes up to and including the sixth scheduled interest
payment. Interest and proceeds that are not invested or reinvested in Collateral
Investments as provided above shall be deposited and held in the Collateral
Account. The Collateral Agent shall not be liable for any loss in the investment
or reinvestment of amounts held in the Collateral Account. The Collateral Agent
is not at any time under any duty to advise or make any recommendation for the
purchase, sale, retention or disposition of the Collateral Investments.

            Section 5. Disbursements. The Collateral Agent shall hold the
Collateral in the Collateral Account and release the same, or a portion thereof,
only as follows:

            (a) Prior to each of the first six scheduled interest payments on
the Notes, the Collateral Agent shall release from the Collateral Account an
amount sufficient to pay the interest due on the Notes on such interest payment
date and will take any action necessary to provide for the payment of the
interest on the Notes to the Holders in accordance with the payment provisions
of the Indenture from, and to the extent of, proceeds of the Collateral in the
Collateral Account. Nothing in this Section 5 shall affect the Collateral
Agent's rights to apply the Collateral to the payments of amounts due on the
Notes upon acceleration thereof.

            (b) If, prior to the date on which the sixth scheduled interest
payment on the Notes is due:

                  (i) an Event of Default under the Notes occurs and is
continuing; and

                  (ii) the Trustee or the Holders of 25% in aggregate principal
amount of the Notes accelerate the Notes by declaring the principal amount of
the Notes to be immediately due and payable in accordance with the provisions of
the Indenture, except for the occurrence and continuance of an Event of Default
under Section 6.01(7) and (8) of the Indenture, upon which the Notes will be
accelerated automatically pursuant to the Indenture,

then the Collateral Agent shall promptly, subject to applicable bankruptcy laws,
release the proceeds from the Collateral Account to the Holders of the Notes.
Distributions from the Collateral Account shall be applied, for the ratable
benefit of the Holders, as follows:

                  (x) first, to any accrued and unpaid interest on the Notes;
and

                  (y) second, to the extent available, to the repayment of the
remaining Obligations, including the principal amount of the Notes.

            (c) Any surplus of such proceeds held by the Collateral Agent and
remaining after payment in full of all of the Obligations shall be paid over to
the Pledgor.

            (d) In the event that the Collateral held in the Collateral Account
exceeds 100% of the amount sufficient to provide for payment in full of the
first six scheduled interest payments due on the Notes (or, in the event an
interest payment or payments have been made, an amount sufficient to provide for
payment in full of all interest payments remaining, up to and including the
sixth scheduled interest payment), the Collateral Agent shall release to the
Pledgor, at the Pledgor's written request, accompanied by evidence, satisfactory
to the Collateral Agent, documenting the existence and amount of such excess,
any such excess Collateral.

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<PAGE>

            (e) Upon the release of any Collateral from the Collateral Account,
in accordance with the terms of this Pledge Agreement, the security interest
evidenced by this Pledge Agreement in such released Collateral will
automatically terminate and be of no further force and effect.

            (f) Except as expressly provided in this Section 5, nothing
contained in this Pledge Agreement shall (i) afford the Pledgor any right to
issue entitlement orders with respect to any security entitlement to the Pledged
Securities or Collateral Investments or any securities account in which any such
security entitlement may be carried, or otherwise afford the Pledgor control of
any such security entitlement or (ii) otherwise give rise to any rights of the
Pledgor with respect to the Collateral Investments, any security entitlement
thereto or any securities account in which any such security entitlement may be
carried, other than the Pledgor's rights under this Pledge Agreement as the
beneficial owner of Collateral pledged to and subject to the exclusive dominion
and control (including, without limitation, securities control) of the
Collateral Agent in its capacity as such (and not as a securities intermediary).
The Pledgor acknowledges, confirms and agrees that the Securities Intermediary
holds a security entitlement to the Collateral Investments solely for the
Collateral Agent for the benefit of the Trustee and the ratable benefit of the
Holders and not as a securities intermediary for the Pledgor. For the avoidance
of doubt, the Securities Intermediary will, without any consent of the Pledgor
being required, follow only the instructions and entitlement orders of the
Collateral Agent.

            Section 6. Representations and Warranties. The Pledgor hereby
represents and warrants, as of the date hereof, that:

            (a) The execution and delivery by the Pledgor of, and the
performance by the Pledgor of its obligations under, this Pledge Agreement will
not contravene any provision of applicable law or the memorandum of association,
articles of association or equivalent organizational instruments of the Pledgor
or any material agreement or other material instrument binding upon the Pledgor
or any of its subsidiaries or any judgment, order or decree of any governmental
body, agency or court having jurisdiction over the Pledgor or any of its
subsidiaries, or result in the creation or imposition of any Lien on any assets
of the Pledgor, except for the lien and security interests granted under this
Pledge Agreement; no consent, approval, authorization or order of, or
qualification with, and no notice to or filing with, any governmental body or
agency or other third party is required (i) for the performance by the Pledgor
of its obligations under this Pledge Agreement, (ii) for the pledge by the
Pledgor of the Collateral pursuant to this Pledge Agreement or for the
execution, delivery or performance of this Agreement by the Pledgor or (iii) for
the perfection or maintenance of the pledge, assignment and security interest

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<PAGE>

created hereby (including the first priority nature of such pledge, assignment
or security interest), except for the filing of financing and continuation
statements under the Uniform Commercial Code of applicable jurisdictions which
financing statements have been delivered pursuant to 3(c) hereof, or (iv) except
for any such consents, approvals, authorizations or orders required to be
obtained by the Collateral Agent (or the Holders) for reasons other than the
consummation of this transaction, for the exercise by the Collateral Agent of
the rights provided for in this Pledge Agreement or the remedies in respect of
the Collateral pursuant to this Pledge Agreement.

            (b) The Pledgor is the legal and beneficial owner of the Collateral,
free and clear of any Lien or claims of any Person (except for the lien and
security interests granted under this Pledge Agreement). No effective financing
statement or other instrument similar in effect covering all or any part of the
Collateral is on file in any public office other than the financing statements,
if any, to be filed pursuant to this Pledge Agreement.

            (c) This Pledge Agreement has been duly authorized, validly executed
and delivered by the Pledgor and (assuming the due authorization and valid
execution and delivery of this Pledge Agreement by each of the Trustee and the
Collateral Agent and enforceability of this Pledge Agreement against each of the
Trustee and the Collateral Agent in accordance with its terms) constitutes a
valid and binding agreement of the Pledgor, enforceable against the Pledgor in
accordance with its terms, except as (i) the enforceability hereof may be
limited by bankruptcy, insolvency, fraudulent conveyance, preference,
reorganization, moratorium or similar laws now or hereafter in effect relating
to or affecting the rights or remedies of creditors generally, (ii) the
availability of equitable remedies may be limited by equitable principles of
general applicability and the discretion of the court before which any
proceeding therefor may be brought, (iii) the exculpation provisions and rights
to indemnification hereunder may be limited by U.S. federal and state securities
laws and public policy considerations, and (iv) the waiver of rights and
defenses contained in Section 15.11 and Section 15.15 hereof may be limited by
applicable law. (d) Upon the delivery to the Collateral Agent of the Collateral
in accordance with the terms hereof and the filing of the financing statements
referred to in Section 3(c) hereof, the pledge of and grant of a security
interest in the Collateral securing the payment of the Obligations for the
benefit of the Trustee and the ratable benefit of the Holders will constitute a
valid, first priority, perfected security interest in such Collateral (except,
with respect to proceeds, only to the extent permitted by Section 9-315 of the
N.Y. Uniform Commercial Code), enforceable as such against all creditors of the
Pledgor and any persons purporting to purchase any of the Collateral from the
Pledgor other than as permitted by the Indenture. Upon filing of the financing
statements described in Section 3(c) hereof, all filings and other actions
necessary or desirable to perfect and protect such security interest will have
been duly taken.

            (e) There are no legal or governmental proceedings pending or, to
the best of the Pledgor's knowledge, threatened to which the Pledgor or any of
its subsidiaries is a party or to which any of the properties of the Pledgor or
any of its subsidiaries is subject that would materially adversely affect the
power or ability of the Pledgor to perform its obligations under this Pledge
Agreement or to consummate the transactions contemplated hereby.

            (f) The pledge of the Collateral pursuant to this Pledge Agreement
is not prohibited by law or governmental regulation (including, without
limitation, Regulations G, T, U and X of the Board of Governors of the Federal
Reserve System) applicable to the Pledgor.

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<PAGE>

            (g) No Event of Default exists.

            (h) The chief place of business and chief executive office of the
Pledgor are located at the address first specified above for the Pledgor.

            (i) The Pledged Securities delivered to the Collateral Agent
pursuant to Section 3(a) for the benefit of the Trustee and the ratable benefit
of the Holders are in a principal amount that will be sufficient upon receipt of
scheduled interest and principal payments of such securities to provide for
payment in full of the first six scheduled interest payments due on the Notes.

            Section 7. Further Assurances. The Pledgor will, promptly upon the
request by the Collateral Agent (which request the Collateral Agent may submit
at the direction of the Holders of a majority in aggregate principal amount of
the Notes then outstanding), execute and deliver or cause to be executed and
delivered, or use its reasonable best efforts to procure, all assignments,
instruments and other documents, deliver any instruments to the Collateral Agent
and take any other actions that are necessary or desirable to perfect, continue
the perfection of, or protect the first priority of the Trustee's security
interest in and to the Collateral, to protect the Collateral against the rights,
claims or interests of third persons or to effect the purposes of this Pledge
Agreement. Without limiting the generality of the foregoing, the Pledgor will,
if any Collateral shall be evidenced by a promissory note or other instrument,
deliver to the Collateral Agent in pledge hereunder such note or instrument duly
indorsed and accompanied by duly executed instruments of transfer or assignment;
and execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary, or as the
Collateral Agent may reasonably request, in order to perfect and preserve the
pledge, assignment and security interest granted or purported to be granted
hereby. The Pledgor also hereby authorizes the Collateral Agent to file any
financing or continuation statements, and amendments thereto, in the United
States with respect to the Collateral reasonably required to perfect the
security interest in the Collateral without the signature of the Pledgor (to the
extent permitted by applicable law). The Pledgor will promptly pay all costs
incurred in connection with any of the foregoing within 45 days of receipt of an
invoice therefor. The Pledgor also agrees, whether or not requested by the
Collateral Agent, to use its reasonable best efforts to perfect or continue the
perfection of, or to protect the first priority of, the Trustee's security
interest in and to the Collateral, and to protect the Collateral against the
rights, claims or interests of third persons.

            Section 8. Covenants. The Pledgor covenants and agrees with the
Collateral Agent, Trustee and the Holders that from and after the date of this
Pledge Agreement until the Termination Date:

            (a) it will not and will not purport to (i) sell or otherwise
dispose of, or grant any option or warrant with respect to, any of the
Collateral or (ii) create or permit to exist any Lien upon or with respect to
any of the Collateral, except for the Liens and security interests granted under
this Pledge Agreement, and at all times will be the sole beneficial owner of the
Collateral;

                                       11
<PAGE>

            (b) it will not (i) enter into any agreement or understanding that
restricts or inhibits or purports to restrict or inhibit the Trustee's or the
Collateral Agent's rights or remedies hereunder, including, without limitation,
the Collateral Agent's right to sell or otherwise dispose of the Collateral or
(ii) fail to pay or discharge any tax, assessment or levy of any nature with
respect to its beneficial interest in the Collateral not later than three
Business Days prior to the date of any proposed sale under any judgment, writ or
warrant of attachment with respect to the Collateral;

            (c) it will keep its chief place of business and chief executive
office at the location therefor specified in Section 6(h) or, upon 30 days'
prior written notice to the Collateral Agent, at such other locations in a
jurisdiction where all actions required by Section 7 have been taken with
respect to the Collateral.

            (d) it will maintain Collateral Investments credited to the
Collateral Account or delivered as provided in Section 3(e) at all times such
that the principal amount thereof is sufficient, upon receipt of scheduled
interest and principal payments of such securities, to provide for payment in
full of the first six scheduled interest payments due on the Notes.

            Section 9. Power of Attorney; Agent May Perform. (a) Subject to the
terms of this Pledge Agreement, the Pledgor hereby appoints and constitutes the
Collateral Agent as the Pledgor's attorney-in-fact, with full power of
substitution, to exercise to the fullest extent permitted by law all of the
following powers upon and at any time after the occurrence and during the
continuance of an Event of Default:

                  (i) collection of proceeds of any Collateral;

                  (ii) conveyance of any item of Collateral to any purchaser
thereof;

                  (iii) giving of any notices or recording of any Liens with
regard to the Collateral; and

                  (iv) paying or discharging taxes or Liens levied or placed
upon the Collateral, the legality or validity thereof and the amounts necessary
to discharge the same to be determined by the Collateral Agent in its sole
reasonable discretion, and such payments made by the Collateral Agent to become
part of the Obligations secured hereby, due and payable immediately upon demand.
The Collateral Agent's authority under this Section 9 shall include, without
limitation, the authority to endorse and negotiate any checks or instruments
representing proceeds of Collateral in the name of the Pledgor, execute and give
receipt for any certificate of ownership or any document constituting
Collateral, transfer title to any item of Collateral, or any other documents
necessary or appropriate to preserve, protect or perfect the security interest
in the Collateral and to file the same, prepare, file and sign the Pledgor's
name on any notice of Lien, to the extent permitted by applicable law, and to
take any other actions arising from or necessarily incident to the powers
granted to the Trustee or the Collateral Agent in this Pledge Agreement. This
power of attorney is coupled with an interest and is irrevocable by the Pledgor.

                                       12
<PAGE>

            (b) If the Pledgor fails to perform any agreement contained herein,
the Collateral Agent may, but is not obligated to, after providing to the
Pledgor notice of such failure and five Business Days to effect such
performance, itself perform, or cause performance of, such agreement, and the
expenses of the Collateral Agent incurred in connection therewith shall be
payable by the Pledgor under Section 13.

            Section 10. No Assumption of Duties; Reasonable Care. The rights and
powers granted to the Collateral Agent hereunder are being granted in order to
preserve and protect the security interest of the Collateral Agent for the
benefit of the Trustee and the ratable benefit of the Holders in and to the
Collateral granted hereby and shall not be interpreted to, and shall not impose
any duties on, the Collateral Agent in connection therewith other than those
expressly provided herein or imposed under applicable law. Except as provided by
applicable law or by the Indenture, the Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in
its possession if the Collateral is accorded treatment substantially equal to
that which the Collateral Agent accords similar property held by the Collateral
Agent for similar accounts, it being understood that the Collateral Agent in its
capacity as such:

            (a) may consult with counsel of its selection, and the advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon; and

            (b) shall not have any responsibility for:

                  (i) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities or other matters relative to any Collateral,
whether or not the Collateral Agent has or is deemed to have knowledge of such
matters;

                  (ii) taking any necessary steps for the existence,
enforceability or perfection of any security interest of the Collateral Agent or
to preserve rights against any parties with respect to any Collateral; or

                  (iii) except as otherwise set forth in Section 4, investing or
reinvesting any of the Collateral; provided, however, that in the case of clause
(a) and clause (b) of this sentence, nothing contained in this Pledge Agreement
shall relieve the Collateral Agent of any responsibilities as a securities
intermediary under applicable law.

In no event shall the Collateral Agent be liable for the existence, validity,
enforceability or perfection of any security interest of the Collateral Agent,
or for special indirect or consequential damages or lost profits or loss of
business, arising in connection with this Agreement.

            Section 11. Indemnity. The Pledgor shall fully indemnify, hold
harmless and defend the Collateral Agent and its directors and officers from and
against any and all claims, losses, actions, obligations, liabilities and
expenses, including reasonable defense costs, reasonable investigative fees and
costs, and reasonable legal fees, expenses, and damages arising from the
Collateral Agent's appointment and performance as Collateral Agent under this
Pledge Agreement, except to the extent that such claim, loss action, obligation,
liability or expense is directly caused by the bad faith, gross negligence or
willful misconduct of such indemnified person. The provisions of this Section 11
shall survive termination of this Pledge Agreement and the resignation and
removal of the Collateral Agent.

                                       13
<PAGE>

            Section 12. Remedies upon Event of Default. Subject to Section 5(b),
if any Event of Default under the Indenture shall have occurred and be
continuing and the Notes shall have been accelerated in accordance with the
provisions of the Indenture:

            (a) The Trustee, the Collateral Agent and the Holders shall have, in
addition to all other rights given by law or by this Pledge Agreement or the
Indenture, all of the rights and remedies with respect to the Collateral of a
secured party upon default under the N.Y. Uniform Commercial Code (whether or
not the N.Y. Uniform Commercial Code applies to the affected Collateral) at that
time. The parties agree that the Collateral is and will be of a type sold on a
recognized market. In any event, with respect to any Collateral that shall then
be in or shall thereafter come into the possession or custody of the Collateral
Agent, the Collateral Agent may appoint a broker or other expert to sell or
cause the same to be sold at any broker's board or at public or private sale, in
one or more sales or lots, at such price or prices such broker or other expert
may deem commercially reasonable, for cash or on credit or for future delivery,
without assumption of any credit risk. The purchaser of any or all Collateral
shall thereafter hold the same absolutely free from any claim, encumbrance or
right of any kind whatsoever created by or through the Pledgor. The parties
agree that no notice of sale is required to be given to the Pledgor since the
Collateral is of a type sold on a recognized market. In the event determined
otherwise or notice of sale is otherwise required under applicable law, the
Collateral Agent will give the Pledgor reasonable notice of the time and place
of any public sale thereof, or of the time after which any private sale or other
intended disposition is to be made. Any requirements of reasonable notice shall
be met if notice of the time and place of any public sale or the time after
which any private sale is to be made is given to the Pledgor as provided in
Section 15.1 hereof at least five (5) days before the time of the sale or
disposition. The Collateral Agent or any Holder may, in its own name or in the
name of a designee or nominee, buy any of the Collateral at any public sale and,
if permitted by applicable law, at any private sale. The Collateral Agent shall
not be obligated to make any sale of Collateral regardless of notice of sale
having been given. The Collateral Agent may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to which it was
so adjourned. All expenses, including court costs and reasonable attorneys'
fees, expenses and disbursements, of, or incident to, the enforcement of any of
the provisions hereof shall be recoverable from the proceeds of the sale or
other disposition of the Collateral.

            (b) The Pledgor further agrees to use its reasonable best efforts to
do or cause to be done all such other acts as may be necessary to make such sale
or sales of all or any portion of the Collateral pursuant to this Section 12
valid and binding and in compliance with any and all other applicable
requirements of law. The Pledgor further agrees that a breach of any of the
covenants contained in this Section 12 will cause irreparable injury to the
Trustee and the Holders, that the Trustee and the Holders have no adequate
remedy at law in respect of such breach and, as a consequence, that each and
every covenant contained in this Section 12 shall be specifically enforceable
against the Pledgor, and the Pledgor hereby waives and agrees not to assert any
defenses against an action for specific performance of such covenants except for
a defense that no Event of Default has occurred.

                                       14
<PAGE>

            (c) All cash proceeds received by the Collateral Agent in respect of
any sale of, collection from, or other realization upon all or any part of the
Collateral shall be held by the Collateral Agent as Collateral for, and/or then
or at any time thereafter applied (after payment of any amounts payable to the
Collateral Agent or the Trustee pursuant to Section 13) by the Collateral Agent
for the ratable benefit of the Holders in accordance with Section 5(b).

            (d) The Collateral Agent may, but is not obligated to, exercise any
and all rights and remedies of the Pledgor in respect of the Collateral.

            (e) Subject to and in accordance with the terms of this Pledge
Agreement, all payments received by the Pledgor in respect of the Collateral
shall be received in trust for the benefit of the Collateral Agent, shall be
segregated from other funds of the Pledgor and shall be forthwith paid over to
the Collateral Agent in the same form as so received (with any necessary
endorsement).

            (f) The Collateral Agent may, without notice to the Pledgor except
as required by law and at any time or from time to time, charge, set-off and
otherwise apply all or any part of the Obligations against the Collateral
Account or any part thereof.

            (g) The Pledgor shall cease to be entitled to direct the investment
of amounts held in the Collateral Account under Section 4 hereof and the
Collateral Agent shall not accept any direction from the Pledgor to invest
amounts held in the Collateral Account.

            Section 13. Fees and Expenses. Pledgor agrees to pay to Collateral
Agent the fees as may be agreed upon from time to time in writing. The Pledgor
will, upon demand, pay to the Trustee and the Collateral Agent the amount of any
and all expenses, including, without limitation, the reasonable fees, expenses
and disbursements of its counsel, experts and agents retained by the Trustee and
the Collateral Agent, that the Trustee and the Collateral Agent may incur in
connection with:

            (a) the review, negotiation and administration of this Pledge
Agreement,

            (b) the custody or preservation of, or the sale of, collection from,
or other realization upon, any of the Collateral;

            (c) the exercise or enforcement of any of the rights of the
Collateral Agent, the Trustee and the Holders hereunder; or

            (d) the failure by the Pledgor to perform or observe any of the
provisions hereof.

            Section 14. Collateral Agent's Representations, Warranties and
Covenants. The Bank of New York (in its capacity as securities intermediary)
represents and warrants that it is as of the date hereof, and it agrees that for
so long as it maintains the Collateral Account and acts as the securities
intermediary pursuant to this Pledge Agreement it shall be, a securities
intermediary and a FRBNY Member. In furtherance of the foregoing, The Bank of
New York (in such capacity) hereby:

                                       15
<PAGE>

            (a) represents and warrants that it is a commercial bank that (in
its capacity as securities intermediary) in the ordinary course of its business
maintains securities accounts for others and is acting in that capacity
hereunder and with respect to the Collateral Account;

            (b) represents and warrants that it maintains a FRBNY Member
Securities Account with the FRBNY;

            (c) agrees that the Collateral Account shall be an account to which
financial assets may be credited, and undertakes to treat the Collateral Agent
(in its capacity as such) as entitled to exercise rights that comprise (and
entitled to the benefits of) such financial assets, and entitled to exercise the
rights of an entitlement holder in the manner contemplated by the UCC;

            (d) represents that, subject to applicable law, it has not granted,
and covenants that so long as it acts as a securities intermediary hereunder it
shall not grant, control (including without limitation, securities control) over
or with respect to any Collateral credited to any Collateral Account from time
to time to any other Person other than the Collateral Agent (in its capacity as
such);

            (e) covenants that it shall not, subject to applicable law,
knowingly take any action inconsistent with, and represents and covenants that
it is not and so long as this Pledge Agreement remains in effect will not
knowingly become, party to any agreement the terms of which are inconsistent
with, the provisions of this Pledge Agreement;

            (f) agrees that any item of property credited to the Collateral
Account shall be treated as a financial asset;

            (g) agrees that any item of Collateral credited to the Collateral
Account shall not be subject to any security interest, Lien or right of set-off
in favor of it as securities intermediary, except as may be expressly permitted
under the Indenture (and in such capacity shall take such actions as shall be
necessary and appropriate to cause such Collateral to remain free of any Lien or
security interest of any underlying securities intermediary through which it
holds such Collateral or any security entitlement thereto);

            (h) agrees to maintain the Collateral Account and maintain
appropriate books and records in respect thereof in accordance with its usual
procedures and subject to the terms of this Pledge Agreement; and

            (i) represents that its jurisdiction as securities intermediary, for
purposes of Section 8-110(e) of the N.Y. Uniform Commercial Code and Section
357.11 of the Treasury Regulations or the corresponding U.S. federal regulations
as they pertain to this Pledge Agreement, the Collateral Account and the
security entitlements relating thereto, shall be the State of New York.

            Section 15. Miscellaneous Provisions.

                                       16
<PAGE>

            15.1. Notices. Any notice, approval, direction, consent or other
communication shall be sufficiently given if in writing and delivered in person
or mailed by first class mail, commercial courier service or telecopier
communication, addressed as follows:

         if to the Pledgor:

         Apex Silver Mines Limited
         c/o Apex Silver Mines Corporation
         1700 Lincoln Street, Suite 3050
         Denver, Colorado 80203
         Attention: Mark Lettes, Chief Financial Officer
         Fax: (303) 764-9165

         if to the Collateral Agent or the Securities Intermediary:

         The Bank of New York
         101 Barclay Street
         Floor 8 West
         New York, New York 10286
         Attention:  Corporate Trust Administration
         Telecopier No.:  (212) 815-5707

         if to the Trustee:

         The Bank of New York
         101 Barclay Street
         Floor 8 West
         New York, New York 10286
         Attention:  Corporate Trust Administration
         TelecopierNo.:  (212) 815-5707

or, as to any such party, at such other address as shall be designated by such
party in a written notice to each other party complying as to delivery with the
terms of this Section 15.1. All such notices and other communications shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; three Business Days after being deposited in the mail, postage
prepaid, if mailed; when receipt is confirmed, if telecopied; and on the next
Business Day if timely delivered to an air courier guaranteeing overnight
delivery.

            15.2. No Adverse Interpretation of Other Agreements. This Pledge
Agreement may not be used to interpret another pledge, security or debt
agreement of the Pledgor or any subsidiary thereof. No such pledge, security or
debt agreement (other than the Indenture) may be used to interpret this Pledge
Agreement.

            15.3. Severability. The provisions of this Pledge Agreement are
severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Pledge Agreement in any jurisdiction.

                                       17
<PAGE>

            15.4. Headings. The headings in this Pledge Agreement have been
inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.

            15.5. Counterpart Originals. This Pledge Agreement may be signed in
two or more counterparts, each of which shall be deemed an original, but all of
which shall together constitute one and the same agreement.

            15.6. Benefits of Pledge Agreement. Nothing in this Pledge
Agreement, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Holders, any benefit or any legal
or equitable right, remedy or claim under this Pledge Agreement.

            15.7. Amendments, Waivers and Consents. Any amendment or waiver of
any provision of this Pledge Agreement and any consent to any departure by the
Pledgor, the Trustee or the Collateral Agent or from any provision of this
Pledge Agreement shall be effective only if made or duly given in compliance
with all of the terms and provisions of the Indenture, and none of the Trustee,
the Collateral Agent, the Pledgor, or any Holder shall be deemed, by any act,
delay, indulgence, omission or otherwise, to have waived any right or remedy
hereunder or to have acquiesced in any default or Event of Default or in any
breach of any of the terms and conditions hereof. Failure of the Trustee, the
Pledgor, the Collateral Agent or any Holder to exercise, or delay in exercising,
any right, power or privilege hereunder shall not preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A
waiver by the Trustee, the Pledgor, the Collateral Agent or any Holder of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy that the Trustee, the Pledgor, the Collateral Agent or such
Holder would otherwise have on any future occasion. The rights and remedies
herein provided are cumulative, may be exercised singly or concurrently and are
not exclusive of any rights or remedies provided by law.

            15.8. [Intentionally Omitted].

            15.9. Continuing Security Interest; Termination.

            (a) This Pledge Agreement shall create a continuing security
interest in and to the Collateral and shall, unless otherwise provided in the
Indenture or in this Pledge Agreement, remain in full force and effect until the
Termination Date. This Pledge Agreement shall be binding upon the parties hereto
and their respective transferees, successors and assigns, and shall inure,
together with the rights and remedies of the Trustee and the Collateral Agent
hereunder, to the benefit of the Trustee, the Collateral Agent, the Pledgor, the
Holders and their respective successors, transferees and assigns.

            (b) Upon the Termination Date, the pledge, assignment and security
interest granted hereby shall terminate and all rights to the Collateral shall
revert to the Pledgor. At such time, the Collateral Agent shall promptly
reassign and redeliver to the Pledgor all of the Collateral hereunder that has
not been sold, disposed of, retained or applied by the Collateral Agent in
accordance with the terms of this Pledge Agreement and the Indenture and execute
and deliver to the Pledgor such documents as the Pledgor shall reasonably
request to evidence such termination. Such reassignment and redelivery shall be
without warranty by or recourse to the Collateral Agent or the Trustee in its
capacity as such, except as to the absence of any Liens on the Collateral
created by or arising through the Collateral Agent or the Trustee, and shall be
at the reasonable expense of the Pledgor.

                                       18
<PAGE>

            15.10. Survival Provisions. All representations, warranties and
covenants contained herein shall survive the execution and delivery of this
Pledge Agreement, and shall terminate only upon the termination of this Pledge
Agreement. The obligations of the Pledgor under Sections 11 and 13 hereof and
the obligations of the Collateral Agent under Section 15.9(b) hereof shall
survive the termination of this Pledge Agreement.

            15.11. Waivers. The Pledgor waives presentment and demand for
payment of any of the Obligations, protest and notice of dishonor or default
with respect to any of the Obligations, and all other notices to which the
Pledgor might otherwise be entitled, except as otherwise expressly provided
herein or in the Indenture.

            15.12. Authority of the Collateral Agent.

            (a) The Collateral Agent shall have and be entitled to exercise all
powers hereunder that are specifically granted to the Collateral Agent by the
terms hereof, together with such powers as are reasonably incident thereto. The
Collateral Agent may perform any of its duties hereunder or in connection with
the Collateral by or through agents or attorneys, shall not be responsible for
any misconduct or negligence on the part of any agent or attorney appointed with
due care by it hereunder and shall be entitled to retain counsel and to act in
reliance upon the advice of counsel concerning all such matters. Except as
otherwise expressly provided in this Pledge Agreement or the Indenture, neither
the Collateral Agent nor any director, officer, employee, attorney or agent of
the Collateral Agent shall be liable to the Pledgor for any action taken or
omitted to be taken by the Collateral Agent, in its capacity as Collateral
Agent, hereunder, except for its own bad faith, gross negligence or willful
misconduct, and the Collateral Agent shall not be responsible for the validity,
effectiveness or sufficiency hereof or of any document or security furnished
pursuant hereto. The Collateral Agent and its directors, officers, employees,
attorneys and agents shall be entitled to rely conclusively on any
communication, instrument or document believed by it or them to be genuine and
correct and to have been signed or sent by the proper Person or Persons. The
Collateral Agent shall have no duty to cause any financing statement or
continuation statement to be filed in respect of the Collateral.

            (b) The Pledgor acknowledges that the rights and responsibilities of
the Collateral Agent under this Pledge Agreement with respect to any action
taken by the Collateral Agent or the exercise or non-exercise by the Collateral
Agent of any option, right, request, judgment or other right or remedy provided
for herein or resulting or arising out of this Pledge Agreement shall, as
between the Collateral Agent and the Holders, be governed by the Indenture and
by such other agreements with respect thereto as may exist from time to time
among them, but, as between the Collateral Agent and the Pledgor, the Collateral
Agent shall be conclusively presumed to be acting as agent for the Trustee and
the Holders with full and valid authority so to act or refrain from acting, and
the Pledgor shall not be obligated or entitled to make any inquiry respecting
such authority.

                                       19
<PAGE>

            15.13. Final Expression. This Pledge Agreement, together with the
Indenture and any other agreement executed in connection herewith, is intended
by the parties as a final expression of this Pledge Agreement and is intended as
a complete and exclusive statement of the terms and conditions thereof.

            15.14. Rights of Holders. No Holder shall have any independent
rights hereunder other than those rights granted to individual Holders pursuant
to Sections 6.05, 6.06 and 6.07 of the Indenture; provided that nothing in this
subsection shall limit any rights granted to the Trustee under the Notes or the
Indenture.

            15.15. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL; WAIVER OF DAMAGES. (a) THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE
EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK, AND, EXCEPT TO THE
EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK, ANY DISPUTE ARISING OUT
OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THE PLEDGOR, THE TRUSTEE, THE COLLATERAL AGENT AND THE HOLDERS IN
CONNECTION WITH THIS PLEDGE AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT,
EQUITY OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK. NOTWITHSTANDING THE FOREGOING, THE MATTERS IDENTIFIED IN 31 C.F.R.
SECTIONS 357.10 AND 357.11 (AS IN EFFECT ON THE DATE OF THIS PLEDGE AGREEMENT)
SHALL BE GOVERNED SOLELY BY THE LAWS SPECIFIED THEREIN.

            (b) THE PLEDGOR HEREBY WAIVES PERSONAL SERVICE OF PROCESS IN ANY
SUIT, ACTION OR PROCEEDING WITH RESPECT TO THIS PLEDGE AGREEMENT AND FOR ACTIONS
BROUGHT UNDER THE U.S. FEDERAL OR STATE SECURITIES LAWS BROUGHT IN ANY FEDERAL
OR STATE COURT LOCATED IN THE CITY OF NEW YORK (EACH A "NEW YORK COURT") AND
CONSENTS THAT ALL SERVICE OF PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING
SHALL BE MADE BY REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO THE
PLEDGOR AT THE ADDRESS INDICATED IN SECTION 15.1. EACH OF THE PARTIES HERETO
SUBMITS TO THE JURISDICTION OF ANY NEW YORK COURT AND TO THE COURTS OF ITS
CORPORATE DOMICILE WITH RESPECT TO ANY ACTIONS BROUGHT AGAINST IT AS DEFENDANT
IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF, CONNECTED WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THE PLEDGOR, THE TRUSTEE, THE
COLLATERAL AGENT AND THE HOLDERS IN CONNECTION WITH THIS PLEDGE AGREEMENT, AND
EACH OF THE PARTIES HERETO WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LAYING
OF VENUE, INCLUDING ANY PLEADING OF FORUM NON CONVENIENS, WITH RESPECT TO ANY
SUCH ACTION AND WAIVES ANY RIGHT TO WHICH IT MAY BE ENTITLED ON ACCOUNT OF PLACE
OF RESIDENCE OR DOMICILE.

                                       20
<PAGE>

            (c) THE PLEDGOR AGREES THAT THE TRUSTEE SHALL, IN ITS CAPACITY AS
TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDER, HAVE THE RIGHT, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE PLEDGOR OR THE
COLLATERAL IN A COURT IN ANY LOCATION REASONABLY SELECTED IN GOOD FAITH (AND
HAVING PERSONAL OR IN REM JURISDICTION OVER THE PLEDGOR OR THE COLLATERAL, AS
THE CASE MAY BE) TO ENABLE THE TRUSTEE TO REALIZE ON SUCH COLLATERAL, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE TRUSTEE. THE
PLEDGOR AGREES THAT IT WILL NOT ASSERT ANY COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS
IN ANY PROCEEDING BROUGHT BY THE TRUSTEE TO REALIZE ON SUCH PROPERTY OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE TRUSTEE, EXCEPT FOR SUCH
COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS WHICH, IF NOT ASSERTED IN ANY SUCH
PROCEEDING, COULD NOT OTHERWISE BE BROUGHT OR ASSERTED.

            (d) THE PLEDGOR AGREES THAT NEITHER ANY HOLDER NOR (EXCEPT AS
OTHERWISE PROVIDED IN THIS PLEDGE AGREEMENT OR THE INDENTURE) THE COLLATERAL
AGENT IN ITS CAPACITY AS COLLATERAL AGENT SHALL HAVE ANY LIABILITY TO THE
PLEDGOR (WHETHER ARISING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY
THE PLEDGOR IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE
TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS PLEDGE
AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH,
UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS
BINDING ON THE TRUSTEE OR SUCH HOLDER, AS THE CASE MAY BE, THAT SUCH LOSSES WERE
THE RESULT OF ACTS OR OMISSIONS ON THE PART OF THE COLLATERAL AGENT OR SUCH
HOLDERS, AS THE CASE MAY BE, CONSTITUTING BAD FAITH, GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.

            (e) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PLEDGOR WAIVES
THE POSTING OF ANY BOND OTHERWISE REQUIRED OF THE TRUSTEE, THE COLLATERAL AGENT
OR ANY HOLDER IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO ENFORCE
ANY JUDGMENT OR OTHER COURT ORDER PERTAINING TO THIS PLEDGE AGREEMENT OR ANY
RELATED AGREEMENT OR DOCUMENT ENTERED IN FAVOR OF THE TRUSTEE, THE COLLATERAL
AGENT OR ANY HOLDER, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY
RESTRAINING ORDER OR PRELIMINARY OR PERMANENT INJUNCTION, THIS PLEDGE AGREEMENT
OR ANY RELATED AGREEMENT OR DOCUMENT BETWEEN THE PLEDGOR, ON THE ONE HAND, AND
THE TRUSTEE, THE COLLATERAL AGENT AND/OR THE HOLDERS, ON THE OTHER HAND.

                                       21
<PAGE>

            15.16. Effectiveness. This Pledge Agreement is deemed to have become
effective upon the effectiveness of the Indenture.

            15.17. Amendment in Conformity with the Indenture. This Pledge
Agreement is deemed by the parties hereto to constitute a Pledge Agreement under
the Indenture.

                            [Signature Page Follows]

                                       22
<PAGE>

      IN WITNESS WHEREOF, the Pledgor, the Trustee and the Collateral Agent have
each caused this Pledge Agreement to be duly executed and delivered as of the
date first above written.

                                Pledgor:
                                APEX SILVER MINES LIMITED
                                By:  /s/
                                     -------------------------------------------
                                     Name:
                                     Title:

                                Trustee:
                                THE BANK OF NEW YORK,
                                as Trustee
                                By:  /s/
                                     -------------------------------------------
                                     Name:
                                     Title:

                                Collateral Agent and Securities Intermediary
                                THE BANK OF NEW YORK,
                                as Collateral Agent and Securities Intermediary
                                By:  /s/
                                     -------------------------------------------
                                     Name:
                                     Title:

                                       23
<PAGE>

                                                          A-2

                                   SCHEDULE I

 List of U.S. Government Obligations Constituting the Initial Pledged Securities

The following U.S. Treasury STRIPS:

Maturity Dates                      CUSIP                    Principal Amount
15-Feb-05                           912820BM8                $1,334,000.00
15-Aug-05                           912833CN8                $2,000,000.00
15-Feb-06                           912833CP3                $2,000,000.00
15-Aug-06                           912833CQ1                $2,000,000.00
15-Feb-07                           912833CR9                $2,000,000.00
15-Aug-07                           912833CS7                $2,000,000.00

                                      A-1
<PAGE>

                                   SCHEDULE II

                List of U.S. Government Obligations Constituting
                       the Additional Pledged Securities

The following U.S. Treasury STRIPS:

Maturity Dates                      CUSIP                    Principal Amount
15-Feb-05                           912820BM8                $534,000.00
15-Aug-05                           912833CN8                $800,000.00
15-Feb-06                           912833CP3                $800,000.00
15-Aug-06                           912833CQ1                $800,000.00
15-Feb-07                           912833CR9                $800,000.00
15-Aug-07                           912833CS7                $800,000.00

                                      A-2SUPPLY AGREEMENT

This Agreement is made as of the ____ day of ________, 1999, by and between The
Empire Company, Inc., a Michigan corporation, with a place of business at 8181
Logistic Drive, Zeeland, Michigan (the "Company") and Fletcher Challenge Forests
USA Inc., a Delaware corporation, ("FCF").

RECITALS

A. FCF and the Company are parties to a Stock Purchase Agreement dated _______
1999 (the "Stock Purchase Agreement") and to a Shareholders' Agreement dated
_______ 1999 (the "Shareholders' Agreement").

B. The parties wish to establish a consistent customer/supplier relationship
with respect to certain products supplied by FCF and distributed by the Company.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties agree as follows:

1. DEFINITIONS.

For purposes of this Agreement, the following terms have the meanings specified
or referred to in this Section 1.

"Confirmation Notice" means a written notice given by FCF to the Company in
response to an Orders List specifying the volume and the grades, profile and
length of the Manufactured Products FCF is willing to supply pursuant to its
supply option.

"Manufactured Product" means the manufactured wood material produced by FCF or
purchased by FCF from other suppliers and sold by the Company and includes
lumber, solid mouldings, raw and primed or painted finger joint mouldings,
boards and other remanufactured products sold and purchased or agreed to be sold
and purchased pursuant to this Agreement and as detailed in Schedule I hereto by
agreement of the parties from time to time hereafter.

"Orders List" means a list of the Manufactured Products required by the Company
detailing:

      (i)   the type, including grade, profile and length, of the Manufactured
            Products required;

      (ii)  the specifications of each grade of the Manufactured Products;

      (iii) the volumes of the grades of the Manufactured Products required;

<PAGE>

      (iv)  the price(s) to be paid by the Company and the payment terms and
            delivery requirements therefor;

      (v)   any other requirements applicable from time to time.

2. SUPPLY OPTION AND PURCHASE COMMITMENT.

2.1 Right to Supply.

During any fiscal year of the Company, whilst this Agreement is in force and
commencing 90 days from the date hereof, FCF shall have the option to supply up
to, and if FCF exercises its option the Company shall purchase from FCF a
monetary amount equal to not less than, fifty percent (50%) of the amount of the
Company's expenditures for the Manufactured Products calculated in the manner
set out in the remainder of this Section 2 and on an aggregate annual basis, not
on an item-by-item basis.

2.2 Notice from the Company.

In order that FCF may exercise the right granted to it under Section 2.1, the
Company shall deliver to FCF from time to time and on a timely basis an Orders
List for the Manufactured Products it requires.

2.3 FCF's Notice.

FCF shall have five (5) working days from the date of receipt of an Orders List
to exercise its right under Section 2.1 by giving a Confirmation Notice to the
Company specifying the Manufactured Products requirements of the Company it has
agreed to supply. The Confirmation Notice shall identify, in respect of each
Manufactured Product specified in the Orders List, the quantity of such
Manufactured Products that FCF has agreed to supply to the Company and the
proposed price at which such Manufactured Products would be supplied. The
parties acknowledge that some items may, as a market necessity, be grouped
together on any given Orders List and may not be broken apart by a Confirmation
Notice specifying some but not all of a grouping.

2.4 Terms and Conditions of Supply.

(a) The Manufactured Products specified in the Confirmation Notice shall be
supplied by FCF on its customary terms of sale, as previously approved by the
Company unless otherwise specified by the Orders List and such terms are
available from another vendor ready and capable of filling the order on a basis
otherwise competitive to FCF.

                                       2
<PAGE>

(b) The prices at which the Manufactured Products specified in the Confirmation
Notice shall be supplied shall be the prices specified in the Confirmation
Notice or, if such prices are not accepted by the Company, shall be the prices
agreed between FCF and the Company within the five (5) day period provided under
Section 2.3, above. In the event that within the required time FCF and the
Company cannot agree on prices or other terms, including delivery required by
the Company, the Company may purchase the Manufactured Products covered by the
Confirmation Notice from any other vendor on competitive terms not less
favorable overall than those specified by the Confirmation Order, including
price, and such amount shall be considered as though it were not with respect to
a Manufactured Product for purposes of calculating whether the Company has met
its fifty percent (50%) commitment under this Section 2.

2.5 Payment.

Payment for all Manufactured Products supplied by FCF will be made by the
Company within ten (10) working days of delivery of such Manufactured Products
to the Company unless otherwise specified by on the Orders List which has been
accepted by a Confirmation Notice.

2.6 Quantity of Manufactured Products Supplied.

The amount of Manufactured Products that FCF is entitled to supply shall be up
to fifty percent (50%) of the monetary amount specified in an Orders List.

3. FORECASTS.

The Company shall use its reasonable efforts to provide to FCF on the first
business day of each month during the term hereof a rolling 3-month forecast and
a rolling 15-month forecast of its needs for Manufactured Products. Such
forecasts may be amended at any time by the Company and actual purchases may be
higher or lower than such forecasts. The forecasts will not be binding on the
parties in any manner and are only intended as budgeting and manufacturing
capacity planning tools for the convenience of the parties.

4. REPORT; AUDIT.

Within ten (10) business days after the end of each fiscal quarter, the Company
shall provide to FCF a written account of the amount of its total purchases of
Manufactured Products applicable to the required purchases hereunder and of its
purchases pursuant to Section 2.1. FCF shall have reasonable access during
normal business hours to the necessary books of the Company in order to verify
the account submitted by the Company.

5. FAILURE TO MEET PURCHASE COMMITMENT.

                                       3
<PAGE>

In the event that the Company shall have failed to purchase a monetary amount
equal to that portion of the amount FCF is entitled to supply under Section 2,
the shortfall shall be added to and become part of the purchase commitment in
the immediately succeeding year or year(s).

6. TERM.

This Agreement shall commence on the date hereof and remain in effect until FCF
no longer owns at least one-third (1/3) of the capital stock of the Company or
unless earlier terminated pursuant to Section 8, below.

7. WARRANTY.

7.1 Included. FCF hereby warrants that the Manufactured Products supplied

hereunder shall be of good workmanship and material and shall conform to the
Company's quality product and packaging specifications.

7.2 Excluded. Except as expressly set forth in this Agreement or any
documentation for any specific order, FCF makes no other warranties, express or
implied, by operation of law, including, but not limited to, IMPLIED WARRANTIES
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

8. TERMINATION.

8.1 The Company or FCF may terminate this Agreement immediately if:

      (a) the other party is in breach of this Agreement and fails to remedy
      such breach within thirty (30) days' notice thereof; or

      (b) in relation to the other party:

            (i) a petition is filed for its winding up, whether voluntary or
            otherwise, or a notice is issued to summon a meeting at which it is
            proposed to pass a resolution for the purposes of winding up that
            party; or

            (ii) a receiver, receiver and manager, statutory manager or similar
            officer is appointed; or

            (iii) a provisional liquidator is appointed or a composition or
            arrangement is made with its creditors or any class of creditors.

8.2 The expiration or earlier termination of this Agreement shall be without
prejudice to the rights and obligations of the parties prior to such expiration
or earlier termination becoming effective.

                                       4
<PAGE>

9. WAIVERS.

The failure by either party at any time to require performance by the other
party of any responsibility or obligation under this Agreement shall in no way
affect the party's right to require such performance at any time thereafter; nor
shall the waiver by such party of a breach of any provision of this Agreement
constitute a waiver of any succeeding breach of the same or any other provision
nor constitute a waiver of the responsibility or obligation itself.

10. BINDING AGREEMENT.

This Agreement shall be binding upon the parties and shall inure to the benefit
of their respective successors or assigns.

11. RELATIONSHIP OF PARTIES.

It is mutually agreed that an independent contractor relationship shall be, and
is, established by this Agreement and that the Company shall perform its
obligations hereunder as an independent contractor and not as an agent, servant,
or employee of FCF.

12. NOTICES.

All notices, consents, waivers, and other communications under this Agreement
must be in writing and will be deemed to have been duly given when (a) delivered
by hand (with written confirmation of receipt), (b) sent by telecopier (with
written confirmation of receipt), provided that a copy is mailed by registered
mail, return receipt requested, or (c) when received by the addressee, if sent
by a nationally recognized express courier delivery service (receipt requested),
in each case to the appropriate addresses and telecopier numbers set forth below
(or to such other addresses and telecopier numbers as a party may designate by
notice to the other parties):

Fletcher Challenge Forests USA Inc.:

Attention: Paul L. Fowler
Facsimile No.: 64 9 571 9870

with a copy to: Floyd Robichaux
Facsimile No.: 64 9 571 9970

The Company:

Attention: Thomas H. Highley
Facsimile No.: 616 748 7665

                                       5
<PAGE>

with a copy to: Dickinson Wright PLLC

Attention: Stuart F. Cheney
Facsimile No.: 616 458 6753

13. GOVERNING LAW.

This Agreement shall be governed by and construed according to the laws of the
State of Michigan without regard to conflicts of laws principles. If any
provision of this Agreement contravenes any applicable law, then such provision
shall be deemed reformed or deleted, but only to the extent necessary to comply
with any such applicable law, and the remaining provisions of this Agreement
shall remain in full force and effect.

14. USE OF WORDS.

The Section headings used herein are for convenience only and shall not be
construed to modify, supplement or otherwise affect the terms hereof. The use of
words in the singular shall be interpreted to be in the plural when appropriate
and vice versa. The use of terms of the masculine gender shall be interpreted to
include the feminine gender when appropriate.

15. ENTIRE AGREEMENT AND MODIFICATION.

This Agreement supersedes all prior agreements between the parties with respect
to its subject matter (including the Letter of Intent between Fletcher Challenge
Forests Limited and Highley dated 6 August 1999 and signed by Highley on 9
August 1999) and constitutes (along with the documents referred to in this
Agreement) a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This Agreement may not
be amended except by a written agreement executed by the party to be charged
with the amendment.

16. FORCE MAJEURE.

In the event that either of the Company or FCF is prevented from performing
their obligations under this Agreement by reason of an action of any
governmental authority, national disaster, war, strike or material casualty loss
which is beyond the reasonable control of the party claiming excuse from
responsibility, then the obligations of the parties hereunder shall be reduced
pro rata for the period of time that failure to perform is so prevented. Notice
shall be sent as soon as is reasonably practicable at the beginning of the event
with respect to which a party is claiming the right to reduce obligations
hereunder and again within five (5) days after such event no longer prevents
performance. Receipt of such notice by the other party shall entitle the
claiming party to the reduced obligations provided for hereunder commencing five
(5) days before the date of delivery of such notice

                                       6
<PAGE>

and ending upon the date that the claimed event ceases to prevent performance by
such party.

17. ASSIGNMENT.

Neither party may assign any of its rights under this Agreement without the
prior consent of the other party, which will not be unreasonably withheld,
except that FCF may assign any of its rights under this Agreement to any
Affiliate of FCF which is not a direct competitor of the Company.

18. CROSS-DEFAULT.

The parties agree that any default or Breach by a party hereto under or of
either the Stock Purchase Agreement or the Shareholders' Agreement, which
default or Breach continues for more than the applicable cure period, if any,
with respect thereto, shall constitute a default or Breach by that party of this
Agreement.

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first written above.

FCF:                                    The Company:

By:                                     By:
   --------------------------------        -------------------------------------
             Director                      Thomas H. Highley
                                           Chief Executive Officer

                                        7

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