As filed with the Securities and Exchange Commission on October 8, 2020.
Registration No. 333-249224
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2 to
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GATOS SILVER, INC.†
(Exact Name of Registrant as Specified in Its Charter)
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Delaware
(State or Other Jurisdiction of Incorporation or Organization) |
1040
(Primary Standard Industrial Classification Code Number) |
27-2654848
(I.R.S. Employer Identification Number) |
8400 E. Crescent Parkway, Suite 600
Greenwood Village, CO 80111
(303) 784-5350
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
Stephen Orr
Chief Executive Officer and Director
Sunshine Silver Mining & Refining Corporation
8400 E. Crescent Parkway, Suite 600
Greenwood Village, CO 80111
(303) 784-5350
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)
| Copies to: | ||
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Richard D. Truesdell, Jr. Derek Dostal Davis Polk & Wardwell LLP 450 Lexington Avenue New York, NY 10017 (212) 450-4000 |
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Michael J. Zeidel Ryan J. Dzierniejko Skadden, Arps, Slate, Meagher & Flom LLP One Manhattan West New York, NY 10001 (212) 735-3000 |
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| Large accelerated filer o | Accelerated filer o | Non-accelerated filer o |
Smaller reporting company ý
Emerging growth company ý |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ý
CALCULATION OF REGISTRATION FEE
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Title of Each Class of Securities
To Be Registered |
Proposed Maximum
Aggregate Offering Price(1)(2) |
Amount of
Registration Fee(3) |
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Common Stock, par value $0.001 per share |
$100,000,000 | $10,910 | ||
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The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
This Amendment No. 2 to the Registration Statement on Form S-1 (the "Registration Statement") is being filed solely for the purpose of filing certain exhibits as indicated in Item 16 of Part II of the Registration Statement. This Amendment does not modify any provision of the prospectus that forms a part of the Registration Statement. Accordingly, a preliminary prospectus has been omitted.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
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Amount to
be Paid |
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SEC registration fee |
$ | * | ||
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FINRA filing fee |
* | |||
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NYSE listing fee |
* | |||
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TSX listing fee |
* | |||
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Transfer agents' fees |
* | |||
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Printing and engraving expenses |
* | |||
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Legal fees and expenses |
* | |||
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Accounting fees and expenses |
* | |||
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Blue sky fees and expenses |
* | |||
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Miscellaneous |
* | |||
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Total |
$ | * | ||
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Each of the amounts set forth above, other than the SEC registration fee and the FINRA filing fee, is an estimate.
Item 14. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law, or the DGCL, provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed actions, suits or proceedings in which such person is made a party by reason of such person being or having been a director, officer, employee or agent to such corporation. The DGCL provides that Section 145 is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise. The Registrant's Amended and Restated Certificate of Incorporation provides for indemnification by the Registrant of its directors, officers and employees to the fullest extent permitted by the DGCL. The Registrant intends to enter into indemnification agreements with each of its directors and executive officers to provide these directors and officers additional contractual assurances regarding the scope of the indemnification set forth in the Registrant's Amended and Restated Certificate of Incorporation and to provide additional procedural protections. These agreements, among other things, will require the Registrant to indemnify each director and executive officer to the fullest extent permitted by Delaware law, including indemnification for expenses such as attorneys' fees, judgments, fines and settlement amounts incurred by the director or executive officer in any action or proceeding, including any action or proceeding by or in right of the Registrant, arising out of the person's services as a director or executive officer.
Section 102(b)(7) of the DGCL permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for unlawful payments of dividends or unlawful stock repurchases, redemptions or other distributions, or (iv) for any
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transaction from which the director derived an improper personal benefit. The Registrant's Amended and Restated Certificate of Incorporation provides for such limitation of liability.
The Registrant maintains standard policies of insurance under which coverage is provided (a) to its directors and officers against loss arising from claims made by reason of breach of duty or other wrongful act, and (b) to the Registrant with respect to payments which may be made by the Registrant to such officers and directors pursuant to the above indemnification provision or otherwise as a matter of law.
The proposed form of Underwriting Agreement (to be filed as Exhibit 1.1 to this Registration Statement) will provide for indemnification of directors and officers of the Registrant by the underwriters against certain liabilities.
Item 15. Recent Sales of Unregistered Securities.
During the past three years, we have issued and sold the securities described below without registering the securities under the U.S. Securities Act.
The offers, sales and issuances of the securities described in the preceding table were exempt from registration either (i) under Section 4(a)(2) of the U.S. Securities Act and the rules and regulations promulgated thereunder in that the transactions were between an issuer and sophisticated investors or members of its senior executive management and did not involve any public offering within the meaning of Section 4(a)(2), (ii) under Regulation S promulgated under the U.S. Securities Act in that offers, sales and issuances were not made to persons in the United States and no directed selling efforts were made in the United States, (iii) under Rule 144A under the U.S. Securities Act in that the shares were offered and sold by the initial purchasers to qualified institutional buyers or (iv) under Rule 701 promulgated under the U.S. Securities Act in that the transactions were under compensatory benefit plans and contracts relating to compensation.
Item 16. Exhibits and Financial Statement Schedules.
(a) The list of exhibits set forth under "Exhibit Index" at the end of the is Registration Statement is incorporated by reference.
(b) No financial statement schedules are provided because the information called for is not required or is shown either in the financial statements or the notes thereto.
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The undersigned Registrant hereby undertakes:
(a) Insofar as indemnification for liabilities arising under the U.S. Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions referenced in Item 14 of this Registration Statement, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the U.S. Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer, or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered hereunder, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the U.S. Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(a) For purposes of determining any liability under the U.S. Securities Act, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the U.S. Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective.
(b) For the purpose of determining any liability under the U.S. Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Denver, State of Colorado, on October 8, 2020.
| SUNSHINE SILVER MINING & REFINING CORPORATION | ||||||
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By: |
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/s/ STEPHEN ORR |
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| Name: | Stephen Orr | |||||
| Title: | Chief Executive Officer | |||||
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Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
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Signature
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Title
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Date
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/s/ STEPHEN ORR
Stephen Orr |
Chief Executive Officer and Director (principal executive officer) | October 8, 2020 | ||||
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/s/ ROGER JOHNSON Roger Johnson |
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Chief Financial Officer (principal financial officer and principal accounting officer) |
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October 8, 2020 |
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* Thomas S. Kaplan |
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Chairman of the Board of Directors |
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October 8, 2020 |
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* Janice Stairs |
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Lead Director |
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October 8, 2020 |
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* Jeb Burns |
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Director |
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October 8, 2020 |
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* Ali Erfan |
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Director |
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October 8, 2020 |
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* Igor Gonzales |
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Director |
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October 8, 2020 |
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* Karl Hanneman |
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Director |
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October 8, 2020 |
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* Igor Levental |
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Director |
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October 8, 2020 |
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* David Peat |
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Director |
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October 8, 2020 |
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*By: |
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/s/ ROGER JOHNSON Roger Johnson Attorney-in-Fact |
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AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
GATOS SILVER, INC.
The original name of the corporation is Sunshine Silver Mines Corporation. The original Certificate of Incorporation of the corporation was filed with the Secretary of State of the State of Delaware on February 2, 2011. On October 14, 2014, the corporation changed its name to Sunshine Silver Mining & Refining Corporation. On [•], 2020, the corporation changed its name to Gatos Silver, Inc. This Amended and Restated Certificate of Incorporation, which both restates and integrates and further amends the provisions of the corporation’s Certificate of Incorporation, was duly adopted by the stockholders in accordance with the provisions of Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware. Prompt written notice of the adoption of the amendments and the restatement of the Certificate of Incorporation herein has been given to those stockholders who have not consented in writing thereto, as provided in Section 228 of the General Corporation Law of the State of Delaware.
The Amended and Restated Certificate of Incorporation of the corporation is hereby amended and restated as of [•], 2020 to read in its entirety as follows:
ARTICLE 1
NAME
The name of the corporation is Gatos Silver, Inc. (the “Corporation”).
ARTICLE 2
REGISTERED OFFICE AND AGENT
The address of its registered office in the State of Delaware is 160 Greentree Dr., Ste. 101, City of Dover, County of Kent, Delaware, 19904. The name of its registered agent at such address is National Registered Agents, Inc.
ARTICLE 3
PURPOSE
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware as the same exists or may hereafter be amended (“Delaware Law”).
ARTICLE 4
CAPITAL STOCK
Section 1. Authorized Capital Stock. Effective on the filing of this Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware (the “Effective Time”), each [•] shares of the Corporation’s common stock, par value $0.001 per share (the “Common Stock”), outstanding and held of record by each stockholder of the Corporation (including treasury shares) immediately prior to the Effective Time (i) shall be exchanged in part for [•] validly issued, fully-paid and non-assessable shares of the common stock, par value $0.001 per share, of Silver Opportunity
Partners Corporation, a Delaware Corporation, and (ii) the remaining shares shall be exchanged for [•] validly issued, fully-paid and non-assessable shares of Common Stock, in each case, automatically and without any action by the holder thereof upon the Effective Time (such exchange of shares, the “Recapitalization”). The par value of the Common Stock following the Recapitalization shall remain at $0.001 per share. No fractional shares of Common Stock shall be issued as a result of the Recapitalization and, in lieu thereof, any person who would otherwise be entitled to a fractional share of Common Stock as a result of the Recapitalization, following the Effective Time, shall be entitled to receive a cash payment equal to the fraction of which such holder would otherwise be entitled multiplied by the fair market value per share as determined in good faith by the Board of Directors.
The total number of shares of stock which the Corporation shall have authority to issue is 750 million shares, consisting of 700 million shares of Common Stock, and 50 million shares of preferred stock, par value $0.001 per share (the “Preferred Stock”).
Section 2. Preferred Stock. The Board of Directors is hereby empowered, without any action or vote by the Corporation’s stockholders (except as may otherwise be provided by the terms of any class or series of Preferred Stock then outstanding), to authorize by resolution or resolutions from time to time the issuance of one or more classes or series of Preferred Stock and to fix the designations, powers, preferences and relative, participating, optional or other rights, if any, and the qualifications, limitations or restrictions thereof, if any, with respect to each such class or series of Preferred Stock and the number of shares constituting each such class or series, and to increase or decrease the number of shares of any such class or series to the extent permitted by Delaware Law.
Section 3. Voting Rights. Each holder of Common Stock, as such, shall be entitled to one vote for each share of Common Stock held of record by such holder on all matters on which stockholders generally are entitled to vote; provided, however, that, except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Amended and Restated Certificate of Incorporation (including any certificate of designations relating to any class or series of Preferred Stock) that relates solely to the terms of one or more outstanding classes or series of Preferred Stock if the holders of such affected class or series are entitled, either separately or together with the holders of one or more other such classes or series, to vote thereon pursuant to this Amended and Restated Certificate of Incorporation (including any certificate of designations relating to any class or series of Preferred Stock) or pursuant to Delaware Law.
ARTICLE 5
BOARD OF DIRECTORS
Section 1. Power of the Board of Directors. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.
Section 2. Number of Directors. Subject to the terms of any series of Preferred Stock entitled to separately elect directors, the number of directors which shall constitute the Board of Directors shall, as of the date this Amended and Restated Certificate of Incorporation becomes effective, consist of not less than three nor more than 12 directors, with the exact number of directors to be determined from time to time solely by resolutions adopted by the affirmative vote of a majority of the Board of Directors.
Section 3. Election of Directors.
(a) All of the directors will be elected annually at the annual meeting of stockholders.
(b) A majority of the Board of Directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors and, except as otherwise expressly required by law or
by this Amended and Restated Certificate of Incorporation, the act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors.
(c) The names and mailing addresses of the persons who are to serve initially as directors are:
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Name |
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Mailing Address |
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Stephen Orr |
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Janice Stairs (Chair) |
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Ali Erfan |
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Igor Gonzales |
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Karl Hanneman |
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Igor Levental |
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David Peat |
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Charles Hansard |
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(d) Each director shall hold office until such director’s successor shall have been duly elected and qualified or until such director’s earlier death, resignation or removal.
(e) There shall be no cumulative voting in the election of directors. Election of directors need not be by written ballot unless the bylaws of the Corporation so provide.
Section 4. Vacancies. Vacancies on the Board of Directors resulting from death, resignation, removal or otherwise and newly created directorships resulting from any increase in the number of directors may be filled solely by a majority of the directors then in office (although less than a quorum) or by the sole remaining director, and each director so elected shall hold office until his or her successor is elected and qualified.
Section 5. Removal.
(a) No director may be removed from office by the stockholders except for cause with the affirmative vote of the holders of not less than 66 2/3% of the shares then entitled to vote generally in the election of directors, voting together as a single class, unless approved by the Board of Directors, in which case such removal for cause requires the affirmative vote of the holders of more than 50% of the shares then entitled to vote generally in the election of directors, voting together as a single class.
(b) Notwithstanding anything else contained herein, whenever the holders of one or more classes or series of Preferred Stock shall have the right, voting separately as a class or series, to elect directors, the election, term of office, filling of vacancies, removal and other features of such directorships shall be governed by the terms of such class or series of Preferred Stock adopted by resolution or resolutions adopted by the Board of Directors pursuant to Article 4 applicable thereto, and such directors so elected shall not be subject to the provisions of this Article 5 unless otherwise provided therein.
ARTICLE 6
STOCKHOLDERS
Section 1. No Action by Written Consent of Stockholders. Subject to the to the rights of the holders of any class or series of Preferred Stock then outstanding, as may be set forth in the resolution or resolutions adopted by the Board of Directors pursuant to Article 4 hereto for such class or series of Preferred Stock, any action required or permitted to be taken at any annual or special meeting of stockholders may be taken only upon a vote of stockholders at an annual or special meeting of stockholders duly noticed and called in accordance with the Corporation’s bylaws and Delaware Law and may not be taken by written consent of stockholders without a meeting.
Section 2. Annual Meeting of Stockholders. An annual meeting of stockholders for the election of directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting shall be held at such place, on such date, and at such time as the Board of Directors shall determine.
Section 3. Special Meetings of Stockholders. Special meetings of the stockholders may be called only by the Secretary of the Corporation at the direction of the Board of Directors acting pursuant to a resolution adopted by a majority of the Board of Directors. Notwithstanding the foregoing, whenever holders of one or more classes or series of Preferred Stock shall have the right, voting separately as a class or series, to elect directors, such holders may call, pursuant to the terms of such class or series of Preferred Stock adopted by resolution or resolutions of the Board of Directors pursuant to Article 4 hereto, special meetings of holders of such Preferred Stock.
ARTICLE 7
LIMITATIONS ON LIABILITY AND INDEMNIFICATION
Section 1. Limited Liability. A director of the Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director to the fullest extent permitted by Delaware Law.
Section 2. Right to Indemnification.
(a) Each person (and the heirs, executors or administrators of such person) who was or is a party or is threatened to be made a party to, or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such
person is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, shall be indemnified and held harmless by the Corporation to the fullest extent permitted by Delaware Law. The right to indemnification conferred in this Article 7 shall also include the right to be paid by the Corporation the expenses incurred in connection with any such proceeding in advance of its final disposition to the fullest extent authorized by Delaware Law. The right to indemnification conferred in this Article 7 shall be a contract right.
(b) The Corporation may, by action of its Board of Directors, provide rights to indemnification and to advancement of expenses to such of the employees and agents of the Corporation to such extent and to such effect as the Board of Directors shall determine to be appropriate and authorized by Delaware Law.
(c) The Corporation hereby acknowledges that the directors designated by Electrum and MERS pursuant to Section 5.19 of the Shareholders Agreement may have certain rights to indemnification, advancement of expenses and/or insurance provided by Electrum and MERS and certain of their affiliates (collectively, the “Fund Indemnitors”). The Corporation hereby agrees (i) that it is the indemnitor of first resort (i.e., its obligations to such Persons are primary and any obligation of the Fund Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by such Persons are secondary), (ii) that it shall be required to advance the full amount of expenses incurred by such Persons and shall be liable for the full amount of all expenses, judgments, penalties, fines and amounts paid in settlement to the extent legally permitted and as required by the terms of this Amended and Restated Certificate of Incorporation or the bylaws of the Corporation (or any other agreement between the Corporation and such Persons), without regard to any rights such Persons may have against the Fund Indemnitors, and (iii) that it irrevocably waives, relinquishes and releases the Fund Indemnitors from any and all claims against the Fund Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. The Corporation further agrees that no advancement or payment by the Fund Indemnitors on behalf of such Persons with respect to any claim for which such Persons have sought indemnification from the Corporation shall affect the foregoing and the Fund Indemnitors shall be subrogated to the extent of such advancement or payment to all of the rights of recovery of such Persons against the Corporation. The Corporation and each such Person agree that the Fund Indemnitors are express third party beneficiaries of the terms of this Section 2.
Section 3. Insurance. The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss incurred by such person in any such capacity or arising out of such person’s status as such, whether or not the Corporation would have the power to indemnify such person against such liability under Delaware Law.
Section 4. Nonexclusivity of Rights. The rights and authority conferred in this Article 7 shall not be exclusive of any other right that any person may otherwise have or hereafter acquire.
Section 5. Preservation of Rights. Neither the amendment nor repeal of this Article 7, nor the adoption of any provision of this Amended and Restated Certificate of Incorporation or the bylaws of the Corporation, nor, to the fullest extent permitted by Delaware Law, any modification of law, shall adversely affect any right or protection of any person granted pursuant hereto existing at, or arising out of or related to any event, act or omission that occurred prior to, the time of such amendment, repeal, adoption or modification (regardless of when any proceeding (or part thereof) relating to such event, act or omission arises or is first threatened, commenced or completed).
ARTICLE 8
FORUM SELECTION
Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the corporation, (ii) any action asserting a claim of breach of fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of Delaware Law or as to which the Delaware Law confers jurisdiction on the Court of Chancery of the State of Delaware, or (iv) any action asserting a claim governed by the internal affairs doctrine, in each case subject to said Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein; provided that, the provisions of this Article 8 do not apply to suits brought to enforce any liability or duty created by the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, or any other claim for which the federal courts have exclusive jurisdiction; and provided further that, if and only if the Court of Chancery of the State of Delaware dismisses any such action for lack of subject matter jurisdiction, such action may be brought in another state or federal court sitting in the State of Delaware. Unless the Corporation consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended.
To the fullest extent permitted by applicable law, any person or entity purchasing or otherwise acquiring or holding any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article 8.
If any provision or provisions of this Article 8 shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Article 8 (including, without limitation, each portion of any sentence of this Article 8 containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby.
ARTICLE 9
CORPORATE OPPORTUNITIES
To the fullest extent permitted by applicable law, the Corporation, on behalf of itself and its subsidiaries, renounces any interest or expectancy of the Corporation and its subsidiaries in, or in being offered an opportunity to participate in, business opportunities that are from time to time presented to any of either Electrum or MERS or any of their respective officers, directors, agents, shareholders, members, partners, affiliates and subsidiaries (other than the Corporation and its subsidiaries) (each, a “Specified Party”), even if the opportunity is one that the Corporation or its subsidiaries might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so and each such Specified Party shall have no duty to communicate or offer such business opportunity to the Corporation and, to the fullest extent permitted by applicable law, shall not be liable to the Corporation or any of its subsidiaries for breach of any fiduciary or other duty, as a director or officer or otherwise, by reason of the fact that such Specified Party pursues or acquires such business opportunity, directs such business opportunity to another person or fails to present such business opportunity, or information regarding such business opportunity, to the Corporation or its subsidiaries. Notwithstanding the foregoing, a Specified Party who is a director or officer of the Corporation and who is offered a business opportunity in his or her capacity as a director or officer of the Corporation (a “Directed Opportunity”)
shall be obligated to communicate such Directed Opportunity to the Corporation, provided, however, that all of the protections of this Article 9 shall otherwise apply to the Specified Parties with respect to such Directed Opportunity, including, without limitation, the ability of the Specified Parties to pursue or acquire such Directed Opportunity or to direct such Directed Opportunity to another person.
Neither the amendment nor repeal of this Article 9, nor the adoption of any provision of this Amended and Restated Certificate of Incorporation or the bylaws of the Corporation, nor, to the fullest extent permitted by Delaware Law, any modification of law, shall adversely affect any right or protection of any person granted pursuant hereto existing at, or arising out of or related to any event, act or omission that occurred prior to, the time of such amendment, repeal, adoption or modification (regardless of when any proceeding (or part thereof) relating to such event, act or omission arises or is first threatened, commenced or completed).
If any provision or provisions of this Article 9 shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (a) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Article 9 (including, without limitation, each portion of any paragraph of this Article 9 containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (b) to the fullest extent possible, the provisions of this Article 9 (including, without limitation, each such portion of any paragraph of this Article 9 containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its directors, officers, employees and agents from personal liability in respect of their good faith service to or for the benefit of the Corporation to the fullest extent permitted by law.
This Article 9 shall not limit any protections or defenses available to, or indemnification rights of, any director or officer of the Corporation under this Amended and Restated Certificate of Incorporation or applicable law.
Any person or entity purchasing or otherwise acquiring any interest in any securities of the Corporation shall be deemed to have notice of and to have consented to the provisions of this Article 9.
ARTICLE 10
MISCELLANEOUS
The following provisions are inserted for the management of the business and the conduct of the affairs of the Corporation and for the further definition of the powers of the Corporation and of its directors and stockholders:
For so long as that certain Shareholders Agreement, dated as of [•], 2020, by and among the Corporation and the stockholders named therein, as amended from time to time (the “Shareholders Agreement”), is in effect, the provisions of the Shareholders Agreement shall be incorporated by reference into the relevant provisions hereof, and such provisions shall be interpreted and applied in a manner consistent with the terms of the Shareholders Agreement.
As used herein, the following terms shall have the following meanings:
“Electrum” means Electrum Silver US LLC, Electrum Silver US II LLC, Tigris Financial Group Ltd., GRAT Holdings LLC and Manul Capital Management LLC.
“MERS” means the Municipal Employee’s Retirement System of Michigan.
ARTICLE 11
AMENDMENTS OF CERTIFICATE OF INCORPORATION AND BYLAWS
Section 1. Amendment of Certificate of Incorporation. This Amended and Restated Certificate of Incorporation may be amended only by the approval of the Board of Directors and the vote of at least 66 2/3% of the shares then entitled to vote generally in the election of directors, voting together as a single class.
Section 2. Amendment of Bylaws. The bylaws of the Corporation may be amended by the approval of either a majority of the Board of Directors or holders of at least 66 2/3% of the shares then entitled to vote in the election of directors, voting together as a single class.
IN WITNESS WHEREOF, the undersigned has executed this Amended and Restated Certificate of Incorporation this day of , 2020.
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Title: |
AMENDED AND RESTATED BYLAWS
OF
GATOS SILVER, INC.
ARTICLE 1
OFFICES
Section 1.01. Registered Office. The registered office of the Corporation shall be in the City of Dover, County of Kent, State of Delaware.
Section 1.02. Other Offices. The Corporation may also have offices at such other places, both within and without the State of Delaware, as the Board of Directors may from time to time determine or the business of the Corporation may require.
Section 1.03. Books. The books of the Corporation may be kept within or without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require.
ARTICLE 2
MEETINGS OF STOCKHOLDERS
Section 2.01. Time and Place of Meetings. All meetings of stockholders shall be held at such place, either within or without the State of Delaware, on such date and at such time as may be determined from time to time by the Board of Directors (or the Chair of the Board of Directors in the absence of a designation by the Board of Directors).
Section 2.02. Annual Meetings. An annual meeting of stockholders for the election of directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting shall be held at such place, on such date, and at such time as the Board of Directors shall determine.
Section 2.03. Special Meetings. Except as otherwise provided in the Amended and Restated Certificate of Incorporation, special meetings of stockholders may be called only by the Secretary of the Corporation at the direction of the Board of Directors acting pursuant to a resolution adopted by a majority of the Board of Directors.
Section 2.04. Notice of Meetings and Adjourned Meetings; Waivers of Notice.
(a) Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, if any, date and hour of the meeting, the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Unless otherwise provided by the General Corporation Law of the State of Delaware as the same exists or may hereafter be amended (“Delaware Law”), such notice shall be given not less than 10 nor more than 60 days before the date of the meeting (or at such other time as may be required by applicable securities laws) to each stockholder of record entitled to vote at such meeting. The Board of Directors or the chair of the meeting may adjourn the meeting to another time or place (whether or not a quorum is present), and notice need not be given of the adjourned meeting if the time, place, if any, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, are announced at the meeting at which
such adjournment is made. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 30 days, or after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.
(b) A written waiver of any such notice signed by the person entitled thereto, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.
Section 2.05. Quorum. Unless otherwise provided under the Amended and Restated Certificate of Incorporation or these Bylaws and subject to Delaware Law, the presence, in person or by proxy, of the holders of a majority of the total voting power of all outstanding securities of the Corporation generally entitled to vote at a meeting of stockholders shall constitute a quorum for the transaction of business. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the chair of the meeting or a majority in voting interest of the stockholders present in person or represented by proxy may adjourn the meeting, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted that might have been transacted at the meeting as originally notified.
Section 2.06. Voting.
(a) Unless otherwise provided in the Amended and Restated Certificate of Incorporation and subject to Delaware Law, each stockholder shall be entitled to one vote for each outstanding share of capital stock of the Corporation held by such stockholder. Any share of capital stock of the Corporation held by the Corporation shall have no voting rights. Except as otherwise required by law, the Amended and Restated Certificate of Incorporation or these Bylaws, in all matters other than the election of directors, the affirmative vote of the holders of a majority of the votes cast at the meeting on the subject matter shall be the act of the stockholders. Abstentions and broker non-votes shall not be counted as votes cast. Subject to the rights of the holders of any class or series of preferred stock to elect additional directors under specific circumstances, as may be set forth in the certificate of designations for such class or series of preferred stock, directors shall be elected by a plurality of the votes of the shares of capital stock of the Corporation present in person or represented by proxy at the meeting and entitled to vote on the election of directors.
(b) Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to a corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy, appointed by an instrument in writing, subscribed by such stockholder or by his attorney thereunto authorized, or by proxy sent by mail, delivered in-person or by any means of electronic communication permitted by law, which results in a writing from such stockholder or by his attorney, and delivered to the secretary of the meeting. No proxy shall be voted after three (3) years from its date, unless said proxy provides for a longer period.
Section 2.07. Action by Consent. Subject to the rights of the holders of any class or series of preferred stock then outstanding, as may be set forth in the certificate of designations for such class or series of preferred stock, any action required or permitted to be taken at any annual or special meeting of stockholders may be taken only upon a vote of stockholders at an annual or special meeting of stockholders duly noticed and called in accordance with the Corporation’s Bylaws and Delaware Law and may not be taken by written consent of stockholders without a meeting.
Section 2.08. Organization. At each meeting of stockholders, the Chair of the Board of Directors, if one shall have been elected, or in the Chair’s absence or if one shall not have been elected, the director designated by the vote of the majority of the directors present at such meeting, shall act as chair of the meeting. The Secretary (or in the Secretary’s absence or inability to act, the person whom the chair of the meeting shall appoint secretary of the meeting) shall act as secretary of the meeting and keep the minutes thereof.
Section 2.09. Order of Business. The order of business at all meetings of stockholders shall be as determined by the chair of the meeting.
Section 2.10. Nomination of Directors and Proposal of Other Business.
(a) Annual Meetings of Stockholders.
(i) Nominations of persons for election to the Board of Directors or the proposal of other business to be transacted by the stockholders at an annual meeting of stockholders may be made only (A) pursuant to the Corporation’s notice of meeting (or any supplement thereto), (B) by or at the direction of the Board of Directors or any committee thereof, (C) as may be provided in the certificate of designations for any class or series of preferred stock or (D) by any stockholder of the Corporation who is a stockholder of record at the time of giving of notice provided for in paragraph (ii) of this Section 2.10(a) and at the time of the annual meeting, who shall be entitled to vote at the meeting and who complies with the procedures set forth in this Section 2.10(a), and, except as otherwise required by law, any failure to comply with these procedures shall result in the nullification of such nomination or proposal.
(ii) For nominations or other business to be properly brought before an annual meeting of stockholders by a stockholder pursuant to clause (D) of paragraph (i) of this Section 2.10(a), the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and any such proposed business (other than the nominations of persons for election to the Board of Directors) must constitute a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to, or mailed and received by, the Secretary of the Corporation at the principal executive offices of the Corporation not less than 120 days nor more than 150 days prior to the first anniversary of the preceding year’s annual meeting of stockholders; provided, however, that in the event that the date of the annual meeting is advanced more than 30 days prior to such anniversary date or delayed more than 70 days after such anniversary date then to be timely such notice must be received by the Corporation no earlier than 120 days prior to such annual meeting and no later than the later of 70 days prior to the date of the meeting or the 10th day following the day on which public announcement of the date of the meeting was first made by the Corporation. In no event shall the adjournment or postponement of any meeting, or any announcement thereof, commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.
(iii) A stockholder’s notice to the Secretary shall set forth as to each person whom the stockholder proposes to nominate for election or reelection as a director:
(1) all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934 (as amended (together with the rules and regulations promulgated thereunder), the “Exchange Act”)) including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected);
(2) a reasonably detailed description of any compensatory, payment or other financial agreement, arrangement or understanding that such person has with any other person or entity other than the Corporation including the amount of any payment or payments received or receivable thereunder, in each case in connection with candidacy or service as a director of the Corporation (a “Third-Party Compensation Arrangement”), as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend these Bylaws, the text of the proposed amendment), the reasons for conducting such business and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made and as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the proposal is made;
(3) the name and address of such stockholder (as they appear on the Corporation’s books) and any such beneficial owner;
(4) the class or series and number of shares of capital stock of the Corporation which are held of record or are beneficially owned by such stockholder and by any such beneficial owner;
(5) a description of any agreement, arrangement or understanding between or among such stockholder and any such beneficial owner, any of their respective affiliates or associates, and any other person or persons (including their names) in connection with the proposal of such nomination or other business;
(6) a description of any agreement, arrangement or understanding (including, regardless of the form of settlement, any derivative, long or short positions, profit interests, forwards, futures, swaps, options, warrants, convertible securities, stock appreciation or similar rights, hedging transactions and borrowed or loaned shares) that has been entered into by or on behalf of, or any other agreement, arrangement or understanding that has been made, the effect or intent of which is to create or mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of, such stockholder or any such beneficial owner or any such nominee with respect to the Corporation’s securities;
(7) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to bring such nomination or other business before the meeting;
(8) a representation as to whether such stockholder or any such beneficial owner intends or is part of a group that intends to (i) deliver a proxy statement and/or form of proxy to holders of at least the percentage of the voting power of the Corporation’s outstanding capital stock required to approve or adopt the proposal or to elect each such nominee and/or (ii) otherwise to solicit proxies from stockholders in support of such proposal or nomination;
(9) any other information relating to such stockholder, beneficial owner, if any, or director nominee or proposed business that would be required to be disclosed in a proxy statement or other filing required to be made in connection with the solicitation of proxies in support of such nominee or proposal pursuant to Section 14 of the Exchange Act; and
(10) such other information relating to any proposed item of business as the Corporation may reasonably require to determine whether such proposed item of business is a proper matter for stockholder action.
If requested by the Corporation, the information required under clauses (iii)(4), (5) and (6) of the preceding sentence of this Section 2.10(a) shall be supplemented by such stockholder and any such beneficial owner not later than 10 days after the record date for the meeting to disclose such information as of the record date.
(b) Special Meetings of Stockholders. If the election of directors is included as business to be brought before a special meeting in the Corporation’s notice of meeting, then nominations of persons for election to the Board of Directors at a special meeting of stockholders may be made by any stockholder who is a stockholder of record at the time of giving of notice provided for in this Section 2.10(b) and at the time of the special meeting, who shall be entitled to vote at the meeting and who complies with the procedures set forth in this Section 2.10(b). For nominations to be properly brought by a stockholder before a special meeting of stockholders pursuant to this Section 2.10(b), the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder’s notice shall be delivered to or mailed and received at the principal executive offices of the Corporation (A) not earlier than 150 days prior to the date of the special meeting nor (B) later than the later of 120 days prior to the date of the special meeting or the 10th day following the day on which public announcement of the date of the special meeting was first made. A stockholder’s notice to the Secretary shall comply with the notice requirements of Section 2.10(a)(iii).
(c) General.
(i) To be eligible to be a nominee for election as a director, the proposed nominee must provide to the Secretary of the Corporation in accordance with the applicable time periods prescribed for delivery of notice under Section 2.10(a)(ii) or Section 2.10(b): (1) a completed Directors & Officers questionnaire (in the form provided by the Secretary of the Corporation at the request of the nominating stockholder) containing information regarding the nominee’s background and qualifications and such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as a director of the Corporation or to serve as an independent director of the Corporation, (2) a written representation that, unless previously disclosed to the Corporation, the nominee is not and will not become a party to any voting agreement, arrangement or understanding with any person or entity as to how such nominee, if elected as a director, will vote on any issue or that could interfere with such person’s ability to comply, if elected as a director, with his/her fiduciary duties under applicable law, (3) a written representation and agreement that, unless previously disclosed to the Corporation pursuant to Section 2.10(a)(iii)(A)(2), the nominee is not and will not become a party to any Third-Party Compensation Arrangement and (4) a written representation that, if elected as a director, such nominee would be in compliance and will continue to comply with the Corporation’s corporate governance guidelines as disclosed on the Corporation’s website, as amended from time to time. At the request of the Board of Directors, any person nominated by the Board of Directors for election as a director shall furnish to the Secretary of the Corporation
the information that is required to be set forth in a stockholder’s notice of nomination that pertains to the nominee.
(ii) No person shall be eligible to be nominated by a stockholder to serve as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 2.10. No business proposed by a stockholder shall be conducted at a stockholder meeting except in accordance with this Section 2.10.
(iii) The chair of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed by these Bylaws or that business was not properly brought before the meeting, and if he/she should so determine, he/she shall so declare to the meeting and the defective nomination shall be disregarded or such business shall not be transacted, as the case may be. Notwithstanding the foregoing provisions of this Section 2.10, unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the Corporation to present a nomination or other proposed business, such nomination shall be disregarded or such proposed business shall not be transacted, as the case may be, notwithstanding that proxies in respect of such vote may have been received by the Corporation and counted for purposes of determining a quorum. For purposes of this Section 2.10, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.
(iv) Without limiting the foregoing provisions of this Section 2.10, a stockholder shall also comply with all applicable requirements of the Exchange Act with respect to the matters set forth in this Section 2.10; provided, however, that any references in these Bylaws to the Exchange Act are not intended to and shall not limit any requirements applicable to nominations or proposals as to any other business to be considered pursuant to this Section 2.10, and compliance with paragraphs (a)(i)(D) and (b) of this Section 2.10 shall be the exclusive means for a stockholder to make nominations or submit other business (other than as provided in Section 2.10(c)(v)).
(v) Notwithstanding anything to the contrary, the notice requirements set forth herein with respect to the proposal of any business pursuant to this Section 2.10 shall be deemed satisfied by a stockholder if such stockholder has submitted a proposal to the Corporation in compliance with Rule 14a-8 under the Exchange Act, and such stockholder’s proposal has been included in a proxy statement that has been prepared by the Corporation to solicit proxies for the meeting of stockholders.
ARTICLE 3
BOARD OF DIRECTORS
Section 3.01. General Powers. Except as otherwise provided in Delaware Law or the Amended and Restated Certificate of Incorporation, the business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.
Section 3.02. Number, Election, Classes, Term of Office.
(a) Subject to the terms of any series of Preferred Stock entitled to separately elect directors, the Board of Directors shall consist of not less than three nor more than 12 directors with the exact number of directors to be determined time to time solely by resolution adopted by the affirmative vote of a majority of the entire Board of Directors.
(b) The directors shall be elected at the Corporation’s annual meeting of the stockholders, except as provided in Section 3.12 herein.
(c) Each director shall hold office until such director’s successor shall have been duly elected and qualified or until such director’s earlier death, resignation or removal.
Section 3.03. Quorum and Manner of Acting. A majority of the Board of Directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors and, except as otherwise expressly required by law or by the Amended and Restated Certificate of Incorporation or these Bylaws, the act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors. When a meeting is adjourned to another time or place (whether or not a quorum is present), notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Board of Directors may transact any business which might have been transacted at the original meeting. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat shall adjourn the meeting, from time to time, without notice other than announcement at the meeting, until a quorum shall be present.
Section 3.04. Time and Place of Meetings. The Board of Directors shall hold its meetings at such place, either within or without the State of Delaware, and at such time as may be determined from time to time by the Board of Directors (or the Chair of the Board of Directors in the absence of a determination by the Board of Directors).
Section 3.05. Annual Meeting. The Board of Directors shall meet for the purpose of organization, the election of officers and the transaction of other business, as soon as practicable after each annual meeting of stockholders, on the same day and at the same place where such annual meeting shall be held. Notice of such meeting need not be given. In the event such annual meeting is not so held, the annual meeting of the Board of Directors may be held at such place either within or without the State of Delaware, on such date and at such time as shall be specified in a notice thereof given as hereinafter provided in Section 3.07 herein or in a waiver of notice thereof signed by any director who chooses to waive the requirement of notice.
Section 3.06. Regular Meetings. After the place and time of regular meetings of the Board of Directors shall have been determined and notice thereof shall have been once given to each member of the Board of Directors, regular meetings may be held without further notice being given.
Section 3.07. Special Meetings. Special meetings of the Board of Directors may be called by the Chair of the Board of Directors or the Chief Executive Officer and shall be called by the Chair of the Board of Directors or the Secretary, on the written request of three directors. Notice of special meetings of the Board of Directors shall be given to each director at least six hours before the time of the meeting in such manner as is determined by the Board of Directors.
Section 3.08. Committees. The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or
not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by Delaware Law to be submitted to the stockholders for approval or (ii) adopting, amending or repealing any Bylaw of the Corporation. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required.
Section 3.09. Action by Consent. Unless otherwise restricted by the Amended and Restated Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board of Directors or committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions, are filed with the minutes of proceedings of the Board of Directors or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
Section 3.10. Telephonic Meetings. Unless otherwise restricted by the Amended and Restated Certificate of Incorporation or these Bylaws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or such committee, as the case may be, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.
Section 3.11. Resignation. Any director may resign from the Board of Directors at any time by giving notice to the Board of Directors or to the Secretary of the Corporation. Any such notice must be in writing or by electronic transmission to the Board of Directors or to the Secretary of the Corporation. The resignation of any director shall take effect upon receipt of notice thereof or at such later time as shall be specified in such notice; and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.
Section 3.12. Vacancies. Vacancies on the Board of Directors resulting from death, resignation, removal or otherwise and newly created directorships resulting from any increase in the authorized number of directors shall, except as otherwise required by law, be filled solely by a majority of the directors then in office (although less than a quorum) or by the sole remaining director, and each director so elected shall hold office until such director’s successor shall have been duly elected and qualified or until such director’s earlier death, resignation or removal. If there are no directors in office, then an election of directors may be held in accordance with Delaware Law. Unless otherwise provided in the Amended and Restated Certificate of Incorporation, when one or more directors shall resign from the Board of Directors, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have the power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in the filling of other vacancies.
Section 3.13. Removal.
(a) No director may be removed from office by the stockholders except for cause with the affirmative vote of the holders of not less than 66 2/3% of the shares then entitled to vote generally in the election of directors, voting together as a single class, unless approved by the Board of Directors, in
which such removal for cause requires the affirmative vote of the holders of more than 50% of the shares then entitled to vote generally in the election of directors, voting together as a single class.
(b) Notwithstanding anything else contained herein, whenever the holders of one or more classes or series of Preferred Stock shall have the right, voting separately as a class or series, to elect directors, the election, term of office, filling of vacancies, removal and other features of such directorships shall be governed by the terms of the resolution or resolutions adopted by the Board of Directors pursuant to Article 4 of the Amended and Restated Certificate of Incorporation applicable thereto, and such directors so elected shall not be subject to the provisions of Section 3.13 of this Article 3 unless otherwise provided therein.
Section 3.14. Compensation. Unless otherwise restricted by the Amended and Restated Certificate of Incorporation or these Bylaws, the Board of Directors shall have authority to fix the compensation of directors, including fees and reimbursement of expenses.
Section 3.15. Preferred Stock Directors. Notwithstanding anything else contained herein, whenever the holders of one or more classes or series of preferred stock shall have the right, voting separately as a class or series, to elect directors, the election, term of office, filling of vacancies, removal and other features of such directorships shall be governed by the terms of the resolutions applicable thereto adopted by the Board of Directors pursuant to the Amended and Restated Certificate of Incorporation, and such directors so elected shall not be subject to the provisions of Sections 3.02, 3.12 and 3.13 of this Article 3 unless otherwise provided therein.
ARTICLE 4
OFFICERS
Section 4.01. Principal Officers. The principal officers of the Corporation shall be a Chief Executive Officer, a Chief Financial Officer, one or more executive Vice Presidents, a Treasurer and a Secretary who shall have the duty, among other things, to record the proceedings of the meetings of stockholders and directors in a book kept for that purpose. The Corporation may also have such other principal officers, including one or more Controllers, as the Board of Directors may in its discretion appoint. One person may hold the offices and perform the duties of any two or more of said offices, except that no one person shall hold the offices and perform the duties of Chief Executive Officer and Secretary.
Section 4.02. Appointment, Term of Office and Remuneration. The principal officers of the Corporation shall be appointed by the Board of Directors in the manner determined by the Board of Directors. Each such officer shall hold office until his or her successor is appointed, or until his or her earlier death, resignation or removal. The remuneration of all officers of the Corporation shall be fixed by the Board of Directors. Any vacancy in any office shall be filled in such manner as the Board of Directors shall determine.
Section 4.03. Subordinate Officers. In addition to the principal officers enumerated in Section 4.01 herein, the Corporation may have one or more Assistant Treasurers, Assistant Secretaries and Assistant Controllers and such other subordinate officers, agents and employees as the Board of Directors may deem necessary, each of whom shall hold office for such period as the Board of Directors may from time to time determine. The Board of Directors may delegate to any principal officer the power to appoint and to remove any such subordinate officers, agents or employees.
Section 4.04. Removal. Except as otherwise permitted with respect to subordinate officers, any officer may be removed, with or without cause, at any time, by resolution adopted by the Board of Directors.
Section 4.05. Resignations. Any officer may resign at any time by giving notice to the Board of Directors (or to a principal officer if the Board of Directors has delegated to such principal officer the power to appoint and to remove such officer). Any such notice must be in writing. The resignation of any officer shall take effect upon receipt of notice thereof or at such later time as shall be specified in such notice; and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.
Section 4.06. Powers and Duties. The officers of the Corporation shall have such powers and perform such duties incident to each of their respective offices and such other duties as may from time to time be conferred upon or assigned to them by the Board of Directors.
ARTICLE 5
CAPITAL STOCK
Section 5.01. Certificates for Stock; Uncertificated Shares. The shares of the Corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares or a combination of certificated and uncertificated shares. Any such resolution that shares of a class or series will only be uncertificated shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Except as otherwise required by law, the rights and obligations of the holders of uncertificated shares and the rights and obligations of the holders of shares represented by certificates of the same class and series shall be identical. Every holder of stock represented by certificates shall be entitled to have a certificate signed by or in the name of the Corporation by the Chair or Vice Chair of the Board of Directors, or the Chief Executive Officer or any Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of such Corporation, representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue. The Corporation shall not have power to issue a certificate in bearer form.
Section 5.02. Transfer of Shares. Shares of the stock of the Corporation may be transferred on the record of stockholders of the Corporation by the holder thereof or by such holder’s duly authorized attorney upon surrender of a certificate therefor properly endorsed or upon receipt of proper transfer instructions from the registered holder of uncertificated shares or by such holder’s duly authorized attorney and upon compliance with appropriate procedures for transferring shares in uncertificated form, unless waived by the Corporation.
Section 5.03. Authority for Additional Rules Regarding Transfer. The Board of Directors shall have the power and authority to make all such rules and regulations as they may deem expedient concerning the issue, transfer and registration of certificated or uncertificated shares of the stock of the Corporation, as well as for the issuance of new certificates in lieu of those which may be lost or destroyed, and may require of any stockholder requesting replacement of lost or destroyed certificates, bond in such amount and in such form as they may deem expedient to indemnify the Corporation, and/or the transfer agents, and/or the registrars of its stock against any claims arising in connection therewith.
ARTICLE 6
GENERAL PROVISIONS
Section 6.01. Fixing the Record Date.
(a) In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing such record date is adopted by the Board of Directors, and which record date shall not be more than 60 nor less than 10 days before the date of such meeting. If the Board of Directors so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board of Directors determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided that the Board of Directors may in its discretion or as required by law fix a new record date for determination of stockholders entitled to vote at the adjourned meeting, and in such case shall fix the same date or an earlier date as the record date for stockholders entitled to notice of such adjourned meeting.
(b) In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than 60 days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.
Section 6.02. Dividends. Subject to limitations contained in Delaware Law and the Amended and Restated Certificate of Incorporation, the Board of Directors may declare and pay dividends upon the shares of capital stock of the Corporation, which dividends may be paid either in cash, in property or in shares of the capital stock of the Corporation.
Section 6.03. Year. The fiscal year of the Corporation shall commence on January 1 and end on December 31 of each year.
Section 6.04. Corporate Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words “Corporate Seal, Delaware”. The seal may be used by causing it or a facsimile thereof to be impressed, affixed or otherwise reproduced.
Section 6.05. Voting of Stock Owned by the Corporation. The Board of Directors may authorize any person, on behalf of the Corporation, to attend, vote at and grant proxies to be used at any meeting of stockholders of any corporation (except this Corporation) in which the Corporation may hold stock.
Section 6.06. Amendments. These Bylaws may be amended by the approval of either a majority of the Board of Directors or holders of at least 66 2/3% of the shares generally entitled to vote in the election of directors, voting together as a single class.
Section 6.07. Shareholders Agreement. For so long as that certain Shareholders Agreement, dated as of [·], 2020, by and among the Corporation and the stockholders named therein as amended from time to time (the “Shareholders Agreement”), is in effect, the provisions of the Shareholders Agreement shall be incorporated by reference into the relevant provisions hereof, and such provisions shall be interpreted and applied in a manner consistent with the terms of the Shareholders Agreement.
SUNSHINE SILVER MINING & REFINING CORPORATION
AMENDED AND RESTATED LONG TERM INCENTIVE PLAN
1. Purpose. The purpose of the Amended and Restated Sunshine Silver Mining & Refining Corporation Long Term Incentive Plan (the “Plan”) is to recognize the contributions made by Employees (as defined below), consultants and Directors (as defined below) of Sunshine Silver Mining & Refining Corporation (the “Company”) or a Subsidiary and to provide such persons with an additional incentive to use maximum efforts for the future success of the Company and any Subsidiary and to enhance the ability of the Company or a Subsidiary to attract, retain and motivate individuals upon whom the Company’s sustained growth and financial success depend by providing such persons with an opportunity to acquire or increase their proprietary interest in the Company through receipt of rights to acquire Awards (as defined below).
2. Definitions. As used in the Plan, the following definitions shall apply to the capitalized terms indicated below:
“Associate” means (i) any company of which such person or company beneficially owns, directly or indirectly, voting securities carrying more than 10% of the voting rights attached to all voting securities of the company for the time being outstanding, (ii) any partner of that person or company, (iii) any trust or estate in which such person or company has a substantial beneficial interest or as to which such person or company serves as trustee or in a similar capacity, (iv) any relative of that person who resides in the same home as that person, (v) any person who resides in the same home as that person and to whom that person is married or with whom that person is living in a conjugal relationship outside marriage, or (vi) any relative of a person mentioned in clause (v) who has the same home as that person.
“Authorized Officer” means the Chairman of the Board, the Chief Executive Officer of the Company or the senior human resources officer of the Company (or any other senior officer of the Company to whom any of such individuals shall delegate the authority to execute any Award Agreement).
“Award” means the grant of any Option, Stock Appreciation Right, Stock Award, or Cash Award, any of which may be structured as a Performance Award, whether granted singly, in combination or in tandem, to a Participant pursuant to such applicable terms, conditions, and limitations as the Committee may establish in accordance with the objectives of the Plan.
“Award Agreement” means the document (in written or electronic form) communicating the terms, conditions and limitations applicable to an Award. The Committee may, in its discretion, require that the Participant execute such Award Agreement, or may provide for procedures through which Award Agreements are made available but not executed. Any Participant who is granted an Award and who does not
affirmatively reject the applicable Award Agreement shall be deemed to have accepted the terms of Award as embodied in the Award Agreement.
“Board” or “Board of Directors” means the Board of Directors of the Company duly elected by the shareholders of the Company.
“Cash Award” means an Award denominated in cash.
“Change of Control” means (i) any merger or consolidation of the Company with or into any other corporation or other entity or person, or any other corporate reorganization, in which the stockholders of the Company immediately prior to such consolidation, merger or reorganization, own less than a controlling interest in the surviving entity immediately after such consolidation, merger or reorganization; (ii) any transaction or series of related transactions in which control of the Company is acquired by a person or group of persons acting together which would constitute a “group” for purposes of Section 13(d) of the Exchange Act or any successor provisions thereto; or (iii) a sale or other disposition of all or substantially all of the assets of the Company; provided that in no event will a Change of Control include any of the following transactions: (A) any consolidation, merger or similar transaction effected exclusively to change the domicile of the Company; (B) any transaction or series of transactions in which voting securities of the Company are issued principally for bona fide financing purposes or any successor or indebtedness or equity securities of the Company are cancelled or converted or a combination thereof, including, without limitation, an initial public offering or other offering of the Company’s capital stock; (C) any acquisition of such voting power by an individual or entity that, directly or indirectly, controls, is controlled by, or is under common control with, the Company; or (D) any transaction where control of the Company, the surviving parent entity or the entity to which all or substantially all of the Company’s assets are transferred in the transaction or series of transactions is controlled directly or indirectly by one or more Kaplan Parties.
“Code” means the Internal Revenue Code of 1986, as amended.
“Committee” means the Board of Directors, or a committee of the Board of Directors appointed in accordance with Section 3 of the Plan, when acting in connection with the administration of the Plan.
“Common Stock” means the common stock, par value $.001 per share, of the Company.
“Company” means Sunshine Silver Mining & Refining Corporation, a Delaware corporation.
“Continuous Service” means that the Participant’s service with the Company or a Subsidiary, whether as an Employee, consultant or Director, is not interrupted or terminated. The Participant’s Continuous Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders service to the Company or a Subsidiary as an Employee or Director or transfers between locations of the Company or between the Company, its, Subsidiaries, or their respective successors,
provided that there is no interruption or termination of the Participant’s service. For example, a change in status from an Employee of the Company to a Director will not constitute an interruption of Continuous Service. Notwithstanding the foregoing, a Participant’s Continuous Service shall be deemed to have terminated with respect to all Incentive Stock Options granted to such Participant on such date as such Participant’s Continuous Service as an Employee terminates. To the extent permitted by law and any leave of absence policy of the Company, the Committee in its sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave of absence approved by that party, including sick leave, military leave or any other personal leave; provided, however, a Participant’s Continuous Service shall not be deemed to have been terminated because of an approved leave of absence from active service with the Company or a Subsidiary on account of temporary illness, authorized vacation, or granted for reasons of professional advancement, education, health, or government service, or during military leave for any period that is required by the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended (“USERRA”) (if the Participant returns to active service with the Company or a Subsidiary within the period required by USERRA after termination of military leave), or during any period required to be treated as a leave of absence by virtue of any applicable and binding statute (such as the Family and Medical Leave Act of 1993, as amended), personnel policy, or employment agreement. Whether an authorized leave of absence constitutes termination of Continuous Service hereunder shall be determined by the Committee. The Committee shall determine whether any corporate transaction, such as a sale or spin-off of a division or business unit, or a joint venture, shall be deemed to result in a termination of Continuous Service.
“Control” (including its correlative meanings, the terms “controlling,” “controlled by” and “under common control with”) means, with respect to any person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person, whether through the beneficial ownership of voting securities, by contract or otherwise.
“Covered Employee” means any Employee who is or may be a “covered employee,” as defined in Code Section 162(m).
“Deferred Stock Unit” means a unit evidencing the right to receive at a future date one share of Common Stock. Payment by the Company in respect of Deferred Stock Units may be made in the form of cash or Common Stock or a combination thereof as determined by the Committee.
“Deferred Stock Unit Award” means an award in the form of Deferred Stock Units.
“Director” means each member of the Board of Directors of the Company.
“Disability” means (i) in the case of a Participant who receives an Award and whose employment arrangement with the Company or a Subsidiary is subject to the terms of an employment agreement between such Participant and the Company or Subsidiary, which employment agreement includes a definition of “Disability,” the meaning set forth
in such agreement for “Disability” during the period that agreement remains in effect; and (ii) in all other cases, the term “Disability” as used in the Plan or any Award Agreement shall have the meaning set forth in Section 22(e)(3) of the Code; provided, however, that as to any award under the Plan that consists of deferred compensation subject to Section 409A of the Code, the definition of “Disability” shall be deemed modified to the extent necessary to comply with Section 409A of the Code.
“Dividend Equivalents” means, in the case of Stock Awards, including Deferred Stock Units and Restricted Stock Units, an amount equal to all dividends and other distributions (or the economic equivalent thereof) that are payable to shareholders of record during the term of the Stock Awards, as applicable, on a like number of Shares.
“Effective Date” means the date on which this Plan is approved by the stockholders of the Company.
“Employee” means any person, including officers, employed by the Company or a Subsidiary, and any person who is a “common law” employee of the Company or a Subsidiary under United States Internal Revenue Service Revenue Ruling 87-41 (or any successor ruling) or who is a “leased employee” of the Company or a Subsidiary as described in Appendix E of Statement of Financial Accounting Standard No. 123 (revised 2004) Share Based Payments. However, service solely as a Director, or payment of a fee for such service, shall not cause a Director to be considered an “Employee” for purposes of the Plan.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Exercise Price” means the price at which a Participant may exercise his right to receive cash or Common Stock, as applicable, under the terms of an Award.
“Fair Market Value” means, as of a particular date, the value of the Common Stock determined as follows: (i) if the Common Stock is traded in a public market, then the Fair Market Value per share shall be, (A) if the Common Stock is listed on a national securities exchange in the United States and the majority of the trading volume and value of the Common Stock occurs on such national securities exchange, the last reported sale price thereof on the relevant date (or if no Shares of Common Stock were traded on such date, the next preceding date on which the Common Stock was traded), provided that, if the Common Stock is listed on a national securities exchange in Canada, the Fair Market Value per share shall be the VWAP on such national securities exchange for the five (5) trading days immediately preceding such date, or (B) if the Common Stock is not so listed or included, the average of the last reported “bid” and “asked” prices thereof on the relevant date (or if no Shares of Common Stock were traded on such date, the next preceding date on which the Common Stock was traded) as reported on the OTC Bulletin Board, or the Fair Market Value per share as determined by any other method adopted by the Committee from time to time as the Committee may deem appropriate or as may be required in order to comply with applicable laws and regulations; and (ii) at any time at which the Common Stock is not traded in a public market, then the Fair Market Value per share shall be determined by the Board, acting in good faith using a reasonable
application of a reasonable method taking into consideration the provisions of the Treasury Regulations promulgated under Section 409A of the Code, and such determination shall be final and binding for all purposes of the Plan.
“Grant Date” means the date an Award is granted to a Participant pursuant to the Plan.
“Incentive Stock Option” or “ISO” means an Option that is intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Code.
“Insider” means (a) a Director or officer of the Company; (b) a Director or officer of a person or company that is itself an Insider or subsidiary of the Company; (c) a person or company that has (i) beneficial ownership of, or control or direction over, directly or indirectly, more than 10% of the voting rights attached to the outstanding voting securities of the Company, or (ii) a combination of beneficial ownership of, and control or direction over, directly or indirectly, more than 10% of the voting rights attached to the outstanding voting securities of the Company; (d) the Company, where the Company has purchased, redeemed or otherwise acquired a security of its own issue, for as long as it continues to hold that security; or (e) Associates and Affiliates of an Insider. For purposes of this definition, an entity shall be deemed to be an Affiliate of another entity if one of them is the subsidiary of the other or if both are subsidiaries of the same entity or if each of them is controlled by the same entity.
“Kaplan Party” means (A) Thomas S. Kaplan or Dafna Recanati Kaplan; (B) any spouse, parent, sibling or descendant (including by adoption) of either of the persons referred to in clause (A) above; (C) any trust created for the benefit of any of the persons described in clauses (A) or (B) above or any trust for the benefit of such trust; or (D) any person controlled by one or more of the persons referred to in clauses (a), (B) or (C) above.
“Non-Employee Director” means a Director who either (i) is not a current Employee or officer of the Company or a Subsidiary and does not receive compensation directly or indirectly from the Company or a Subsidiary for services rendered as a consultant or in any capacity other than as a Director, or (ii) is otherwise considered a “non-employee director” for purposes of Rule 16b-3 promulgated under the Exchange Act.
“Nonqualified Stock Option” means an Option that is not intended to qualify, or otherwise does not qualify, as an “incentive stock option” within the meaning of Section 422 of the Code.
“Option” means either an ISO or a Nonqualified Stock Option granted under the Plan.
“Participant” means a person to whom an Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Award.
“Performance Award” means an Award made pursuant to the Plan to a Participant which is subject to the attainment of one or more Performance Goals.
“Performance Goal” means one or more standards established by the Committee to determine in whole or in part whether a Performance Award shall be earned.
“Restricted Stock” means a share of Common Stock that is restricted or subject to forfeiture provisions.
“Restricted Stock Award” means an Award in the form of Restricted Stock.
“Restricted Stock Unit” means a unit evidencing the right to receive in specified circumstances one share of Common Stock or equivalent value in cash that is restricted or subject to forfeiture provisions.
“Restricted Stock Unit Award” means an Award in the form of Restricted Stock Units.
“Securities Act” means the Securities Act of 1933, as amended.
“Shares” means the shares of Common Stock of the Company that are the subject of Awards.
“Stock Appreciation Right” or “SAR” means a right to receive a payment, in cash or Common Stock, equal to the excess of the Fair Market Value of a specified number of shares of Common Stock on the date the right is exercised over a specified Exercise Price.
“Stock Award” means an Award in the form of shares of Common Stock, including a Deferred Stock Unit Award, a Restricted Stock Award and a Restricted Stock Unit Award, excluding Options and SARs. Payment by the Company in respect of Stock Awards may be made be in the form of cash or Common Stock or a combination thereof as determined by the Committee.
“Subsidiary” means a corporation that is a subsidiary corporation with respect to the Company within the meaning of Section 424(f) of the Code.
“Ten Percent Shareholder” means an Employee who owns (or is deemed to own pursuant to Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of a Subsidiary.
“VWAP” means the volume weighted average trading price of the Common Stock, calculated by dividing the total value by the total volume of Common Stock traded for the relevant period.
3. Administration of the Plan. The Plan shall be administered by the Board; however, the Board may designate a committee composed of two or more Non-Employee
Directors to administer the Plan in its stead. Any such committee so designated by the Board to administer the Plan shall be constituted as necessary to comply with the legal requirements, if any, relating to the administration of the types of Awards granted under the Plan imposed by applicable corporate and securities laws, the Code and any stock exchange or national market system upon which the Common Stock is then listed or traded. Notwithstanding anything to the contrary contained in this Section 3, the Board shall constitute the Committee and administer the Plan with respect to Awards granted to Non-Employee Directors.
(a) Meetings. The Committee may hold meetings at such times and places as it may determine. Acts approved at a meeting by a majority of the members of the Committee or acts approved in writing by the unanimous consent of the members of the Committee shall be the valid acts of the Committee.
(b) Powers of Committee. The Committee shall have the power, subject to the express provisions of the Plan:
(i) To determine from time to time which of the eligible persons under the Plan shall be granted Awards; when and how each Award shall be granted; what type or combinations of types of Awards shall be granted; the provisions of each Award granted, which need not be identical.
(ii) To construe and interpret the Plan and Awards granted under it, and to establish, amend and revoke rules and regulations for its administration. The Committee, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Award Agreement in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective.
(iii) Generally, to exercise such other powers and perform such acts as the Committee deems necessary or expedient to promote the best interests of the Company and that are not in conflict with the provisions of the Plan or any Awards.
(c) Exculpation. No member of the Committee shall be personally liable for monetary damages for any action taken or any failure to take any action in connection with the administration of the Plan or the granting of Awards under the Plan, provided that this Subsection 3(c) shall not apply to: (i) any breach of such member’s duty of loyalty to the Company or its shareholders; (ii) acts or omissions not in good faith or involving intentional misconduct or a knowing violation of law; and (iii) any transaction from which the member derived an improper personal benefit.
(d) Indemnification. Service on the Committee shall constitute service as a member of the Board of the Company. Each member of the Committee shall be entitled without further action on such person’s part to indemnity from the Company to the fullest extent provided by applicable law and the Company’s Certificate of Incorporation and/or Bylaws in connection with or arising out of any action, suit or proceeding with respect to the administration of the Plan or the granting of Awards thereunder in which such person may be involved by reason of such person’s being or having been a member of the
Committee, whether or not such person continues to be a member of the Committee at the time of the action, suit or proceeding.
(e) Effect of Committee Action. The Committee’s determinations under the Plan (including, without limitation, determinations of the persons to receive Awards, the form, amount and timing of such Awards, the terms and provisions of such Awards and the Award Agreements evidencing same) shall be made in its discretion and need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, Awards under the Plan, whether or not such persons are similarly situated. All determinations and interpretations made by the Committee shall be final, binding and conclusive on all persons, including without limitation, all Participants and persons claiming rights from or through a Participant.
(f) Delegation. The Committee may delegate any of its authority to grant Awards to Employees who are not subject to Section 16(b) of the Exchange Act, subject to Section 3(b) above, to the Board or to any other committee of the Board, provided such delegation is made in writing and specifically sets forth such delegated authority. The Committee may also delegate to an Authorized Officer authority to execute on behalf of the Company any Award Agreement. The Committee and the Board, as applicable, may (i) delegate the authority to officers or employees of the Company or a Subsidiary or (ii) engage or authorize the engagement of a third-party administrator to carry out administrative functions under the Plan. Any such delegation hereunder shall only be made to the extent permitted by applicable law.
4. Shares Subject to Plan. Subject to adjustment as provided in Section 9, the number of Shares that may be issued pursuant to Awards shall not exceed, in the aggregate, 15,000,000 Shares; provided that, starting on January 1, 2022, on January 1 of each year, the total number of Shares available for issuance under the Plan may be increased by an amount equal to the lesser of (i) 2.5% of the Company’s issued and outstanding Shares on December 31 of the immediately preceding year or (ii) such other number of Shares as determined by the Board in its discretion. The Shares shall be issued from authorized and unissued or reacquired Common Stock, including Shares repurchased by the Company. If an Option or SAR shall for any reason expire or otherwise terminate without having been exercised in full for any reason, or if all or any portion of the Shares subject to a Stock Award shall be forfeited for any reason, the Shares for which the Option or SAR was not exercised or the Shares so forfeited shall revert to, and may again become available for the grant of one or more Awards under the Plan.
(a) The Board and the appropriate officers of the Company shall from time to time take whatever actions are necessary to file any required documents with governmental authorities, stock exchanges and transaction reporting systems to ensure that shares of Common Stock are available for issuance pursuant to Awards.
(b) No Awards shall be granted under the Plan following the tenth anniversary of the Effective Date; provided, however, that all Awards granted under the Plan prior to such date shall remain in effect until: (i) in the case of Options or SARs, such Options or SARs have been exercised or terminated in accordance with the Plan and the terms of such Awards, (ii) in the case of Stock Awards, the Shares subject to such Award are no
longer subject to any restrictions (including, without limitation, any risk of forfeiture) or have been returned to the Company in accordance with the Plan and the terms of the applicable Award Agreement; or (iii) in the cash of Cash Awards, the amounts subject to such Award have been paid or the Cash Award has been forfeited or terminated, as applicable.
(c) Insider Participation Limit. Notwithstanding anything to the contrary contained in the Plan, the number of shares of Common Stock issued to Insiders, within any one-year period, and issuable to Insiders, at any time, under the Plan shall not exceed 10% of the Company’s total issued and outstanding shares of Common Stock at any particular time.
5. Eligibility for Employees.
(a) Eligibility for Grant of Awards. Employees shall be eligible to receive Awards at the sole discretion of the Committee.
(b) Ten Percent Shareholders. A Ten Percent Shareholder shall not be granted an ISO unless the exercise price of such Option is at least 110% of the Fair Market Value of the Common Stock on the date of grant, and the Option is not exercisable after the expiration of five (5) years from the date of grant.
6. Consultants and Non-Employee Director Grants under the Plan. Notwithstanding any provision of the Plan to the contrary, each Non-Employee Director of the Company and consultants shall be eligible to be granted Awards under the Plan, other than ISOs, at the discretion of the Board.
7. Award Agreements and Terms. The Committee shall determine the type or types of Awards to be made under the Plan and shall designate from time to time the Participants who are to be the recipients of such Awards. Each Award shall be embodied in an Award Agreement, which shall contain such terms, conditions and limitations as shall be determined by the Committee, in its sole discretion, and, if required by the Committee, shall be signed by the Participant to whom the Award is granted and by an Authorized Officer for and on behalf of the Company. Awards may be granted singly, in combination or in tandem. Awards may also be made in combination or in tandem with, in replacement of, or as alternatives to, grants or rights under the Plan or any other plan of the Company or any of its Subsidiaries, including the plan of any acquired entity; provided, however, that, except as contemplated in Section 9 hereof, no Option or SAR may be issued in exchange for the cancellation of an Option or SAR with a higher Exercise Price nor may the Exercise Price of any Option or SAR be reduced. All or part of an Award may be subject to conditions established by the Committee. Upon the termination of service by a Participant, any unexercised, unvested or unpaid Awards shall be treated as set forth in the applicable Award Agreement or in any other written agreement the Company has entered into with the Participant.
A. Options. Each Option granted under the Plan shall be a Nonqualified Stock Option, unless the Option specifically shall be designated at the time of grant to be an ISO. If any Option designated as an ISO is determined for any reason not to qualify as an incentive stock
option within the meaning of Section 422 of the Code, such Option shall be treated as a Nonqualified Stock Option for all purposes under the provisions of the Plan. Each Option granted pursuant to the Plan shall be evidenced by an Award Agreement in such form as the Committee shall from time to time approve; which Award Agreement shall comply with and be subject to the following terms and conditions and such other terms and conditions as the Committee shall from time to time require that are not inconsistent with the terms of the Plan. The exercise period for an Option shall extend no more than 10 years after the Grant Date, except that the exercise period for an ISO that is granted to a Ten Percent Shareholder shall be five years. Options may not include provisions that “reload” the Option upon exercise.
(a) Exercise Price. Each Award Agreement shall state the Exercise Price applicable to the Option granted therein. Subject to the provisions of Section 5(b) with respect to a Ten Percent Shareholder granted an ISO, the Exercise Price of any Option, whether a Nonqualified Stock Option or an ISO, shall in no event ever be less than 100% of the Fair Market Value of the Shares subject to the Option on the Grant Date as determined by the Committee in accordance with this Section 7A(a). Notwithstanding the foregoing, an Option may be granted with an Exercise Price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Section 424(a) of the Code, subject to the approval of the TSX.
(b) Exercise. No Option shall be deemed to have been exercised prior to the receipt by the Company of written notice of such exercise and of payment in full of the Exercise Price for the Shares to be purchased. Each such notice shall specify the number of Shares to be purchased.
(c) Method of Payment. The purchase price of Common Stock acquired pursuant to the exercise of an Option shall be paid, to the extent permitted by applicable law and as determined by the Committee in its sole discretion, by one or more of the following methods. The Committee shall have authority to grant Options that do not entitle the Participant to use all methods or that require prior written consent of the Company to use certain of the methods. The methods of payment of the Exercise Price are:
(i) cash or check payable in clearinghouse funds to the order of the Company;
(ii) by delivery to the Company of other Shares of Common Stock which, unless otherwise determined by the Committee, have been held for more than six (6) months;
(iii) by a “net exercise” arrangement pursuant to which the Company will reduce the number of Shares issued upon exercise by the largest whole number of the Shares with a Fair Market Value that does not exceed the Exercise Price; provided, however, that the Company shall accept cash or other payment from the Participant to the extent of any remaining balance of the aggregate Exercise Price not so satisfied, provided further that the Shares will no longer be
outstanding under an Option and will not be exercisable thereafter to the extent so applied or withheld to satisfy tax withholding obligations pursuant to Section 16 below; or
(iv) any other form of legal consideration that may be acceptable to the Committee.
(d) Limitation on ISO Grants. To the extent that the aggregate Fair Market Value of the Shares of Common Stock (determined at the time the ISO is granted) with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year under all incentive stock option plans of the Company or its Subsidiaries in which such Participant has been granted ISOs exceeds $100,000, the Options or portions thereof that exceed such limit (according to the order in which they were granted) shall be treated as Nonqualified Stock Options, notwithstanding any contrary provision of the applicable Award Agreement.
B. Stock Appreciation Rights. An Award may be in the form of an SAR. The Exercise Price for an SAR shall not be less than the Fair Market Value of the Common Stock on the Grant Date. The holder of a tandem SAR may elect to exercise either the Option or the SAR, but not both. The exercise period for an SAR shall extend no more than 10 years after the Grant Date. SARs may not include provisions that “reload” the SAR upon exercise. Subject to the foregoing provisions, the terms, conditions, and limitations applicable to any SAR, including, but not limited to, the term of any SAR and the date or dates upon which the SAR becomes vested and exercisable, shall be determined by the Committee.
C. Stock Awards. An Award may be in the form of a Stock Award. The terms, conditions and limitations applicable to any Stock Award, including, but not limited to, vesting or other restrictions, shall be determined by the Committee, and subject to the applicable requirements described herein.
D. Cash Awards. An Award may be in the form of a Cash Award. The terms, conditions and limitations applicable to a Cash Award, including, but not limited to, vesting or other restrictions, shall be determined by the Committee.
E. Performance Awards. Without limiting the type or number of Awards that may be made under the other provisions of the Plan, an Award may be in the form of a Performance Award. The terms, conditions and limitations applicable to an Award that is a Performance Award shall be determined by the Committee. The Committee shall set Performance Goals in its discretion which, depending on the extent to which they are met, will determine the value and/or amount of Performance Awards that will be paid out to the Participant and/or the portion of an Award that may be exercised.
(a) Performance Awards shall be based on achievement of such Performance Goals and be subject to such terms, conditions and restrictions as the Committee or its delegate shall determine.
8. Change of Control.
(a) Options and SARs. Unless otherwise provided in an applicable Award Agreement, upon the consummation of a Change of Control where Options or SARs are not continued, assumed (or substituted) by the Company (or surviving corporation or ultimate parent corporation in a Change of Control transaction), the Committee may, in its sole discretion, (i) provide for full or partial vesting of any outstanding Option or SAR, (ii) determine that any or all outstanding Options or SARs granted under the Plan, whether or not exercisable, will be canceled and terminated and that in connection with such cancellation and termination the holder of such Option or SAR may receive for each share of Common Stock subject to such Option or SAR cash payment (or the delivery of shares of stock, other securities or a combination of cash, stock and securities equivalent to such cash payment) equal to the difference, if any, between the consideration received by shareholders of the Company in respect of a share of Common Stock in connection with such transaction and the Exercise Price multiplied by the number of shares of Common Stock subject to such Award; provided that if such product is zero or less or to the extent that the Option or SAR is not then exercisable, the Option or SAR will be canceled and terminated without payment therefor.
(b) Stock Awards. The Committee shall have the discretion to provide in each Award Agreement relating to Stock Awards the terms and conditions that relate to the lapse of any restrictions on the Shares subject thereto, including without limitation any risk of forfeiture, in the event of a Change of Control, which terms and conditions may vary in each such Award Agreement. The Committee may provide for lapse of restrictions on any Shares subject to a Stock Award prior to a Change of Control in the applicable Award Agreement or by unilateral amendment to any such Award Agreement after the grant of any such award.
9. Adjustments.
(a) The existence of outstanding Awards shall not affect in any manner the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the capital stock of the Company or its business or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stock (whether or not such issue is prior to, on a parity with or junior to the Common Stock) or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding of any kind, whether or not of a character similar to that of the acts or proceedings enumerated above.
(b) In the event of any subdivision or consolidation of outstanding shares of Common Stock, declaration of a dividend payable in shares of Common Stock or other stock split, then (i) the number of shares of Common Stock reserved under the Plan and the number of shares of Common Stock available for issuance pursuant to specific types of Awards as described in Section 4, (ii) the number of shares of Common Stock covered by outstanding Awards, (iii) the Exercise Price or other price in respect of such Awards, (iv) the appropriate Fair Market Value and other price determinations for such Awards, (v) the Stock-Based Award Limitations and (vi) any other limitations contained within the Plan shall each be proportionately adjusted by the Committee as appropriate to reflect
such transaction. In the event of any other recapitalization or capital reorganization of the Company, any consolidation or merger of the Company with another corporation or entity, the adoption by the Company of any plan of exchange affecting the Common Stock or any distribution to holders of Common Stock of securities or property (other than normal cash dividends or dividends payable in Common Stock), the Committee shall make appropriate adjustments to (1) the number of shares of Common Stock reserved under the Plan and the number of shares of Common Stock available for issuance pursuant to specific types of Awards as described in Section 4, (2) the number of shares of Common Stock covered by outstanding Awards, (3) the Exercise Price or other price in respect of such Awards, (4) the appropriate Fair Market Value and other price determinations for such Awards, (5) the Stock-Based Award Limitations and (6) any other limitations contained within the Plan; provided that such adjustments shall only be such as are necessary to maintain the proportionate interest of the holders of the Awards and preserve, without exceeding, the value of such Awards.
(c) In the event of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Committee may make such adjustments to Awards or other provisions for the disposition of Awards as it deems equitable, and shall be authorized, in its discretion, to (i) provide for the substitution of a new Award or other arrangement (which, if applicable, may be exercisable for such property or stock as the Committee determines) for an Award or the assumption of the Award (and for awards not granted under the Plan), regardless of whether in a transaction to which Code Section 424(a) applies, (ii) provide, prior to the transaction, for the acceleration of the vesting and exercisability of, or lapse of restrictions with respect to, the Award and, if the transaction is a cash merger, provide for the termination of any portion of the Award that remains unexercised at the time of such transaction, (iii) provide for the acceleration of the vesting and exercisability of an Award and the cancellation thereof in exchange for such payment as the Committee, in its sole discretion, determines is a reasonable approximation of the value thereof, (iv) cancel any Awards and direct the Company to deliver to the Participants who are the holders of such Awards cash in an amount that the Committee shall determine in its sole discretion is equal to the Fair Market Value of such Awards as of the date of such event, which, in the case of any Option, shall be the amount equal to the excess of the Fair Market Value of a share as of such date over the Exercise Price for such Option or SAR (for the avoidance of doubt, if such exercise price is less than such Fair Market Value, the Option or SAR may be canceled for no consideration), or (v) cancel Awards that are Options or SARs and give the Participants who are the holders of such Awards notice and opportunity to exercise prior to such cancellation.
(d) No adjustment authorized by this Section 9 shall be made in such manner that would result in the Plan or any amounts or benefits payable hereunder to fail to comply with or be exempt from Section 409A, and any such adjustment that may reasonably be expected to result in such failure shall be of no force or effect.
10. Clawback for Misconduct or Restatement. In the event of misconduct by a Participant which results in material harm to the Company, if any of the Company’s financial statements are restated as a result of errors, omissions, or fraud, the Board may (in its sole
discretion, but acting in good faith) direct that the Company recover all or a portion of any such Award made to any, all or any class of Participant with respect to any fiscal year of the Company the financial results of which are negatively affected by such restatement. The amount to be recovered from any Participant shall be (i) the amount by which the affected Award or payment exceeded the amount that would have been payable to such Participant had the financial statements been initially filed as restated, (ii) shares purchased pursuant to exercise of an option that is subject to clawback hereunder or (iii) any greater or lesser amount (including, but not limited to, the entire Award) that the Board shall determine. The Board may determine to recover different amounts from different Participants or different classes of Participants on such basis as it shall deem appropriate. In no event shall the amount to be recovered by the Company from a Participant be less than the amount required to be repaid or recovered as a matter of law. The Board shall determine whether the Company shall effect any such recovery (i) by seeking repayment from the Participant, (ii) by reducing (subject to applicable law and the terms and conditions of the applicable plan, program or arrangement) the amount that would otherwise be payable to the Participant under any compensatory plan, program or arrangement maintained by the Company or a Subsidiary, (iii) by withholding payment of future increases in compensation (including the payment of any discretionary bonus amount) or grants of compensatory awards that would otherwise have been made in accordance with the Company’s otherwise applicable compensation practices, or (iv) by any combination of the foregoing or otherwise.
11. Award Payment; Dividends and Dividend Equivalents.
(a) General. Payment of Awards may be made in the form of cash or Common Stock, or a combination thereof, and may include such restrictions as the Committee shall determine, including, but not limited to, in the case of Common Stock, restrictions on transfer and forfeiture provisions. For a Restricted Stock Award, the certificates evidencing the Shares (to the extent that such Shares are so evidenced) shall contain appropriate legends and restrictions that describe the terms and conditions of the restrictions applicable thereto. For a Restricted Stock Unit Award that may be settled in shares of Common Stock, the shares of Common Stock that may be issued at the end of the vesting period shall be evidenced by book entry registration or in such other manner as the Committee may determine.
(b) Dividends and Dividend Equivalents. Rights to dividends and Dividend Equivalents may be extended to and made part of any Stock Award, subject in each case to such terms, conditions and restrictions as the Committee may establish; provided, however, that no such dividends or Dividend Equivalents shall be paid with respect to unvested Stock Awards, including Stock Awards subject to Performance Goals. Dividends and/or Dividend Equivalents shall not be made part of any Options or SARs.
12. Amendment. Subject to the provisions of the Plan, the Committee shall have the right to amend Award Agreements issued to a Participant, subject to the Participant’s consent if such amendment is not favorable to the Participant, except that the consent of the Participant shall not be required for any amendment made pursuant to Sections 8 and 9 of the Plan, as applicable.
13. Assignability. Unless otherwise determined by the Committee and expressly provided for in an Award Agreement, no Award or any other benefit under the Plan shall be assignable or otherwise transferable except (1) by will or the laws of descent and distribution or (2) pursuant to a domestic relations order issued by a court of competent jurisdiction that is not contrary to the terms and conditions of the Plan or applicable Award and in a form acceptable to the Committee. The Committee may prescribe and include in applicable Award Agreements other restrictions on transfer. Any attempted assignment of an Award or any other benefit under the Plan in violation of this Section 13 shall be null and void. Notwithstanding the foregoing, no Award may be transferred for value or consideration.
14. No Commitment to Retain. The grant of an Award pursuant to the Plan shall not be construed to imply or to constitute evidence of any agreement, express or implied, on the part of the Company or any Subsidiary to retain the Participant in the employ or service of the Company or a Subsidiary and/or as a member of the Board or in any other capacity, or interfere in any way with the right of the Company or a Subsidiary to terminate the services of a Participant.
15. Securities Law Restrictions. Unless the Shares received pursuant to an Award are covered by a then current registration statement or a notification under Regulation A under the Securities Act, each Award Agreement shall contain the Participant’s acknowledgment in form and substance satisfactory to the Company that: (i) such Shares are being purchased for investment and not for distribution or resale (other than a distribution or resale which, in the opinion of counsel satisfactory to the Company, may be made without violating the registration provisions of the Securities Act); (ii) the Participant has been advised and understands that (A) the Shares have not been registered under the Securities Act and are “restricted securities” within the meaning of Rule 144 under the Securities Act and are subject to restrictions on transfer, and (B) the Company is under no obligation to register the Shares under the Securities Act or to take any action which would make available to the Participant any exemption from such registration; (iii) such Shares may not be transferred without compliance with all applicable federal and state securities laws and any other restrictions contained in the Plan and the applicable Award Agreement; and (iv) an appropriate legend referring to the foregoing restrictions on transfer and any other restrictions imposed under the Award Agreement may be endorsed on the certificates. Notwithstanding the foregoing, if the Company determines that issuance of Shares should be delayed pending (1) registration under federal or state securities laws, (2) the receipt of an opinion of counsel satisfactory to the Company that an appropriate exemption from such registration is available, (3) the listing or inclusion of the Shares on any securities exchange or an automated quotation system, or (4) the consent or approval of any governmental regulatory body whose consent or approval is necessary in connection with the issuance of such Shares, the Company may defer issuance of any Shares under an Award Agreement granted hereunder until any of the events described in this sentence has occurred.
16. Withholding of Taxes. The Company shall have the right to deduct applicable taxes from any Award payment and withhold, at the time of delivery or vesting of cash or shares of Common Stock under the Plan, an appropriate amount of cash or number of shares of Common Stock or a combination thereof for payment of required withholding taxes or to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for withholding of such taxes; provided, however, that the number of shares of Common Stock
withheld for payment of required withholding taxes must equal no more than the required minimum withholding taxes. The Committee may also permit withholding to be satisfied by the transfer to the Company of shares of Common Stock theretofore owned by the holder of the Award with respect to which withholding is required. If shares of Common Stock are used to satisfy tax withholding, such shares shall be valued based on the Fair Market Value when the tax withholding is required to be made.
17. Shareholder Rights. No Participant shall be deemed to be the holder of, or to have any of the rights of a holder with respect to any Shares subject to an Award unless and until such Participant has satisfied all requirements applicable to such Award, in accordance with the terms of the Plan and the applicable Award Agreement.
18. Interpretation. The Plan is intended to enable transactions under the Plan with respect to directors and officers (within the meaning of Section 16(a) under the Exchange Act) to satisfy the conditions of said Rule 16b-3 under the Exchange Act or its successors; to the extent that any provision of the Plan would cause a conflict with such conditions or would cause the administration of the Plan as provided in Section 3 to fail to satisfy the conditions of said Rule 16b-3, such provision shall be deemed null and void to the extent permitted by applicable law. This Section shall not be applicable if no class of the Company’s equity securities is then registered pursuant to Section 12 of the Exchange Act.
19. Code Section 409A.
(a) Awards made under the Plan are intended to comply with or be exempt from Code Section 409A, and ambiguous provisions hereof, if any, shall be construed and interpreted in a manner consistent with such intent. No payment, benefit or consideration shall be substituted for an Award if such action would result in the imposition of taxes under Code Section 409A. Notwithstanding anything in the Plan to the contrary, if any Plan provision or Award under the Plan would result in the imposition of an additional tax under Code Section 409A, that Plan provision or Award shall be reformed, to the extent permissible under Code Section 409A, to avoid imposition of the additional tax, and no such action shall be deemed to adversely affect the Participant’s rights to an Award.
(b) Unless the Committee provides otherwise in an Award Agreement, each Restricted Stock Unit Award or Cash Award (or portion thereof if the Award is subject to a vesting schedule) shall be settled no later than the 15th day of the third month after the end of the first calendar year in which the Award (or such portion thereof) is no longer subject to a “substantial risk of forfeiture” within the meaning of Code Section 409A. If the Committee determines that a Restricted Stock Unit Award or a Cash Award is intended to be subject to Code Section 409A, the applicable Award Agreement shall include terms that are designed to satisfy the requirements of Code Section 409A.
(c) If the Participant is identified by the Company as a “specified employee” within the meaning of Code Section 409A(a)(2)(B)(i) on the date on which the Participant has a “separation from service” (other than due to death) within the meaning of Treasury Regulation § 1.409A-1(h), any Award payable or settled on account of a
separation from service that is deferred compensation subject to Code Section 409A shall be paid or settled on the earliest of (1) the first business day following the expiration of six months from the Participant’s separation from service, (2) the date of the Participant’s death, or (3) such earlier date as complies with the requirements of Code Section 409A.
20. Amendment or Termination of the Plan. The Board may amend, suspend or terminate the Plan, but no such amendment or termination shall be made which would adversely affect any outstanding Awards without the written consent of the affected Participants. In addition, to the extent necessary to comply with Section 422 of the Code, Section 16b-3 under the Exchange Act or any other applicable law or regulation, including the requirements of any stock exchange or national market system upon which the Common Stock is then listed, the Company shall obtain shareholder approval of any Plan amendment or termination, except for certain changes which do not need shareholder approval, including, without limitation: (i) minor changes of a “housekeeping nature”; (ii) amending Awards under the Plan, including without limitation with respect to any option period (provided that the period during which an option is exercisable does not exceed ten years from the date the option is granted and that such option is not held by an Insider), vesting period, exercise method and frequency, subscription price (provided that the Award is not held by an Insider) and method of determining the subscription price, assignability and effect of termination of a participant’s employment or engagement or cessation of the participant’s directorship; (iii) accelerating vesting or extending the expiration date of any Award (provided that such Award is not held by an Insider), provided that the period during which an Award is exercisable does not exceed ten years from the date the Award is granted; (iv) changing the terms and conditions of any financial assistance which may be provided by the Company to participants to facilitate the purchase of Common Stock under the Plan; and (v) adding a cashless exercise feature, payable in cash or securities, whether or not providing for a full deduction of the number of underlying Common Stock from the Plan reserve.
21. Effective Date. The Plan is effective as of the Effective Date. The grant of Incentive Stock Options under the Plan is conditioned on the approval of the shareholders of the Company within twelve (12) months after the date the Plan was so adopted by the Board.
22. Choice of Law. The Plan and the Awards granted under the Plan shall be governed by and construed in accordance with the Laws of the State of New York (including Section 5-1401 of the General Obligations Law of the State of New York but otherwise without regard to conflicts of Laws principles).
EXECUTIVE NONQUALIFIED STOCK OPTION AGREEMENT
AGREEMENT by and between SUNSHINE SILVER MINING & REFINING CORPORATION, a Delaware corporation (the “Company”), and [·] (the “Optionee”).
Pursuant to the Sunshine Silver Mining & Refining Corporation Long Term Incentive Plan (as it may be further amended from time to time, the “Plan”), the Company desires to grant to the Optionee, and the Optionee desires to accept from the Company, an option to purchase shares of the common stock of the Company, par value $.001 per share (the “Common Stock”), upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, the Company and the Optionee agree as follows:
1. Grant of Options; Option Price. Effective [·] (the “Grant Date”), the Company hereby grants to the Optionee options to purchase [·] shares of Common Stock (the “Options”). The Options are intended to be treated as options that are not incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).
There are potential tax consequences associated with the grant, vesting and exercise of the Options. It is the responsibility of the Optionee to seek independent tax advice with regard to the tax treatment of the Options, the exercise thereof, the disposition of any Common Stock acquired upon exercise of the Options and any other related matters.
2. Option Price. The purchase price for each Option is $[·] and upon exercise each Option entitles the holder to acquire one share of Common Stock. The purchase price per Option is not less than the fair market value of a share of Common Stock on the Grant Date.
3. Entitlement to Exercise Option; Term of Option.
(a) Subject to the terms of this Agreement and the Plan, [·] shares of the Options shall become exercisable in accordance with the following vesting schedule commencing on [·] (the “Vesting Start Date”) provided that the Optionee has been in Continuous Service following the Vesting Start Date:
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First Anniversary of Vesting Start Date |
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Second Anniversary of Vesting Start Date |
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Fourth Anniversary of Vesting Start Date |
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25 |
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Sunshine Silver Mining & Refining Corporation Long Term Incentive Plan NQSO Agreement
Except provided in paragraph (b) below, the Options shall become exercisable on the vesting dates shown in the table above. To the extent that the vesting schedule results in the vesting of any fractional share on a vesting date prior to the final vesting date, the number of shares vested on such vesting date will be rounded up to the nearest whole number.
Unless sooner terminated pursuant to the terms of this Agreement, the Options will expire if and to the extent not exercised on or before the tenth anniversary of the Grant Date.
(b) Notwithstanding the foregoing, if the Company terminates the Optionee’s Continuous Service without Cause (as defined in the Employment Agreement between the Company and the Optionee (the “Employment Agreement”)) or the Optionee terminates his or her employment for Good Reason (as defined in the Employment Agreement), any Options which remain unvested shall immediately vest and become exercisable. In all other circumstances of termination of the Optionee’s Continuous Service, any Options which are not vested shall be forfeited immediately.
4. Exercise of Option; Method of Payment. (a) Subject to the requirements of Section 2 of the attached Exercise Notice, vested Options may be exercised at any time or from time to time prior to their expiry date. To exercise the Option, the Optionee shall deliver to the Company: (i) a written notice specifying the number of Options to be exercised, and (ii) payment in full of the exercise price, together with the amount, if any, deemed necessary by the Company to enable it to satisfy any federal, state, local or foreign tax or withholding obligations with respect to the exercise of the Options.
(b) The method of payment for exercising Options may be one or a combination of the following: (i) cash or check payable in clearinghouse funds to the order of the Company; (ii) if permitted by the Committee (as defined in the Plan), by delivery to the Company of other shares of Common Stock which, unless otherwise determined by the Committee, have been held for more than six (6) months; (iii) if permitted by the Committee, by a “net exercise” arrangement (as described in the Plan); or (iv) any other form of legal consideration that may be acceptable to the Committee.
(c) The Optionee shall deliver the signed Exercise Notice, in the form provided in Exhibit A, as a condition of exercise of any Options.
5. Rights as a Stockholder. No shares of Common Stock will be issued or delivered pursuant to an exercise of an Option until full payment for such shares has been made and arrangements to satisfy tax withholding requirements have been made to the satisfaction of the Company pursuant to Section 16 of the Plan. The Optionee shall not be deemed to be, or have any rights as, a stockholder with respect to any shares covered by the Options until a stock certificate for such shares has been issued to the Optionee. Except as otherwise provided herein, no adjustment shall be made for dividends or distributions or other rights for which the record date is prior to the date of issuance of such stock certificate.
6. Nontransferability of Options. The Options are not assignable or transferable except by will or by the applicable laws of descent and distribution. The Options are exercisable during the Optionee’s lifetime only by the Optionee or in the case of Disability (as defined in the Employment Agreement), by the Optionee’s legal guardian.
7. Period to Exercise After Termination of Employment. (a) If the Optionee’s Continuous Service with the Company or any Subsidiary terminates by reason of the Optionee’s termination by the Company without Cause or termination by Optionee for Good Reason, then, unless sooner terminated under the terms hereof or pursuant to the Plan, unvested Options (except those that vest as provided in Section 3(b)) will terminate immediately and vested Options (including those that vest as provided in Section 3(b)) will terminate on the 180th day after the date of the Optionee’s termination of Continuous Service.
(b) If the Optionee’s Continuous Service with the Company or any Subsidiary terminates by reason of the Optionee’s death or Disability, then, unless sooner terminated under the terms hereof or pursuant to the Plan, unvested Options will terminate immediately and vested Options will continue to be exercisable for a period of twelve (12) months from the date of the Optionee’s death or Disability.
(c) If the Optionee’s Continuous Service terminates by reason of the Optionee’s resignation without Good Reason, then, unless sooner terminated under the terms hereof or pursuant to the Plan, unvested Options will terminate immediately and vested Options will terminate on the 30th day after such termination of the Optionee’s Continuous Service.
(d) Notwithstanding any other provision of this Agreement, if the Optionee’s Continuous Service terminates by reason of the Optionee’s termination for Cause, all vested and unvested Options will immediately cease to be exercisable and will be forfeited.
(e) During any period following the termination of the Optionee’s Continuous Service in which the Options remain exercisable and during which the shares of Common Stock are not publicly traded, the Company may, in its sole discretion cancel such Option by paying the Optionee the difference between (i) the Fair Market Value of the shares of Common Stock subject to the Options and (ii) the purchase price of the Options, net of applicable withholding taxes. For this purpose, Fair Market Value will be determined in accordance with Section 3(c)(ii) of the attached Exercise Notice.
8. Plan Provisions Control. This Agreement is subject to the terms and conditions of the Plan, which are incorporated herein by reference. Notwithstanding anything to the contrary contained herein, the provisions of the Plan shall govern if and to the extent that there are inconsistencies between the provisions of the Plan and the provisions of this Agreement. The Optionee acknowledges that the Optionee has received a copy of the Plan prior to the execution of this Agreement. Capitalized terms not otherwise defined herein shall have the same meanings set forth in the Plan for such terms.
9. No Rights Conferred. Nothing in this Agreement shall give the Optionee any right to continue in the employ or service of the Company or any Subsidiary and/or as a member of the Company’s Board of Directors or in any other capacity, or interfere in any way with the right of the Company or any Subsidiary to terminate the employment or services of the Optionee.
10. Change of Control; Adjustments. Upon the consummation of a Change of Control, any Option that is not continued, assumed (or substituted) by the Company (or surviving corporation or ultimate parent corporation in a Change of Control transaction) shall vest and become fully
exercisable. All references to the number and class of shares covered by this Agreement, the exercise price per share of each Option, and other terms in this Agreement may be appropriately adjusted, in the discretion of the Committee, in the event of certain changes in capitalization, as set forth in Section 9 of the Plan.
11. Securities Law and Other Requirements. Exercise of an Option is subject to compliance with applicable securities and other laws, rules and regulations, including without limitation as set forth in Section 15 of the Plan, and the Company may defer exercise of an Option to ensure compliance with such laws, rules and regulations.
12. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and permitted assigns. This Agreement may not be assigned or transferred in whole or in part except as provided in the Plan.
13. Interpretation of this Agreement. All determinations and interpretations made by the Committee with regard to any questions arising under the Plan or this Agreement shall be final, binding and conclusive as to all persons, including without limitation the Optionee and any person claiming rights from or through the Optionee.
14. Dispute Resolution and Arbitration. The Company and the Optionee shall attempt in good faith to resolve any dispute arising out of or relating to this Agreement promptly by negotiation. If the matter has not been resolved within thirty (30) calendar days of a party’s request for negotiation, either party may initiate proceedings or arbitration only as provided herein. If any dispute arising out of or relating to this Agreement or the breach, termination or validity thereof has not been resolved by negotiation, such dispute shall be settled by binding arbitration in accordance with the then current rules of JAMS by a single independent and impartial arbitrator who is located in Denver, Colorado. The arbitrator selected must have an expertise in the matter(s) in dispute. Each party shall bear his/her/its own fees and costs; the fees, costs and all administrative expenses of arbitration shall be borne equally by the Company and the Optionee. The parties understand and agree that the arbitration is subject to the rules of JAMS; that the arbitrator’s decision and award shall be final and binding as to all claims that were, or could have been, raised in arbitration; and that judgment upon the award rendered by the arbitrator may be entered in any court having competent jurisdiction. Any award rendered hereunder may include an award of attorneys’ fees and costs but shall not include punitive damages. The statute of limitations of the state of New York applicable to the commencement of a lawsuit shall apply to the commencement of any arbitration.
15. Governing Law; Entire Agreement. This Agreement shall be governed by and construed in accordance with the Laws of the State of New York (including Section 5-1401 of the General Obligations Law of the State of New York but otherwise without regard to conflicts of laws principles). The Plan and this Agreement constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior understandings and agreements, written or oral, of the parties hereto with respect to the subject matter hereof. This Agreement may be amended by the Committee, subject to the Optionee’s consent if such amendment is not favorable to the Optionee, except that the consent of the Optionee shall not be required for any amendment made pursuant to Section 8 or Section 9 of the Plan.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.
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EXHIBIT A
SUNSHINE SILVER MINING & REFINING CORPORATION
STOCK OPTION AND LONG TERM INCENTIVE PLAN
EXERCISE NOTICE
This Agreement (“Agreement”) is made as of , by and between Sunshine Silver Mining & Refining Corporation, a Delaware corporation (the “Company”), and , (“Purchaser”). To the extent any capitalized terms used in this Agreement are not defined, they shall have the meaning ascribed to them in the Company’s Stock Option and Long Term Incentive Plan (the “Plan”).
1. Exercise of Option. Subject to the terms and conditions hereof, Purchaser hereby elects to exercise options to purchase shares of the Common Stock (the “Shares”) of the Company under and pursuant to the Plan and the Stock Option Agreement granted on , (the “Option Agreement”). The purchase price for the Shares shall be $ per Share for a total purchase price of $ . The term “Shares” refers to the purchased Shares and all securities received in replacement of the Shares or as stock dividends or splits, all securities received in replacement of the Shares in a recapitalization, merger, reorganization, exchange or the like, and all new, substituted or additional securities or other properties to which Purchaser is entitled by reason of Purchaser’s ownership of the Shares.
2. Time and Place of Exercise. The purchase and sale of the Shares under this Agreement shall occur at the principal office of the Company simultaneously with the delivery of this executed Agreement and payment of the exercise price and payment of all applicable taxes in accordance with the provisions of Section 4 of the Option Agreement. Promptly or as soon as practicable thereafter, if the Shares are certificated, the Company will deliver to Purchaser (or hold in escrow) a certificate representing the Shares to be purchased by Purchaser (which shall be issued in Purchaser’s name or to the order of Purchaser if the Shares are publicly traded on any stock exchange or over-the-counter market and the Shares have been registered under the Securities Act of 1933, as amended (the “Securities Act”)).
3. Limitations on Transfer. In addition to any other limitation on transfer created by applicable securities laws, Purchaser shall not assign, encumber or dispose of any interest in the Shares except in compliance with the provisions below and applicable securities laws.
(a) Private Company. Purchaser acknowledges that the Company shall have the right, but not the obligation, at any time following the termination of Purchaser’s Continuous Service for any reason or after exercise of an Option if the Option is exercised after termination of Purchaser’s Continuous Service for any reason, to repurchase all or part of the Shares (the “Repurchase Right”). The repurchase price shall be the Fair Market Value of those Shares as of the date the Repurchase Right is exercised. The Fair Market Value per Share will be determined as set forth in Section 3(c)(ii) of this Agreement.
(i) Procedure. The Repurchase Right shall be exercised by the Company or its assigns by giving Purchaser written notice of the Company’s intention to exercise the Repurchase Right. Upon such notification, Purchaser shall promptly surrender to the Company, free and clear of any liens or encumbrances, any certificates representing the Shares being purchased, together with a duly executed stock power for the transfer of such Shares to the Company or the Company’s assignee or assignees. Upon the Company’s or its assignee’s receipt of the certificates from Purchaser, the Company or its assignee or assignees shall, as soon as practicable following the determination of the Fair Market Value of the shares of Common Stock being purchased, (1) deliver to Purchaser a check in the amount of the aggregate Repurchase Price, (2) cancel an amount of Purchaser’s indebtedness to the Company, if any, equal to the Repurchase Price, or (3) by a combination of (1) and (2) so that the combined payment and cancellation of indebtedness equals the Repurchase Price. Upon delivery of such notice and the payment of the Repurchase Price (by one of the methods specified in the previous sentence), the Company shall become the legal and beneficial owner of the Shares being repurchased and all rights and interests therein or relating thereto, and the Company shall have the right to retain and transfer to its own name the number of Shares being repurchased by the Company.
(ii) Assignment of Repurchase Right. Whenever the Company shall have the right to repurchase shares of Common Stock hereunder, the Company may designate and assign one or more employees, officers, directors or shareholders of the Company or other persons or organizations to exercise all or a part of the Company’s Repurchase Right and purchase all or a part of such Shares.
(b) No Other Transfer Permitted.
(i) General Rule. Except as otherwise permitted by the Company in writing or pursuant to Section 3(b)(ii), no Shares held by Purchaser or any transferee of Purchaser may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.
(ii) Estate Planning Transfers. Notwithstanding any other provisions of the Plan and this Agreement to the contrary, Purchaser may, with the consent of the Company, such consent not to be unreasonably withheld, assign the Shares for bona fide estate planning purposes by Purchaser to his or her issue, or to a trustee or trustees of a trust whose vested beneficiaries then include any such of Purchaser’s kindred, if (i) the persons who would control the Shares and the proposed arrangements for the control of the Shares are reasonably satisfactory to the Company, including, without limitation, that any Shares will remain subject to all of the forfeiture and transfer restrictions and conditions set forth herein and in the Plan and (ii) the requirements of the Securities Act and any applicable state securities or blue sky laws are met.
(c) Involuntary Transfer.
(i) Company’s Right to Purchase upon Involuntary Transfer. In the event, at any time after the date of this Agreement, of any transfer by operation of law
or other involuntary transfer (including death or divorce) of all or a portion of the Shares by the record holder thereof, the Company shall have an option to purchase all of the Shares transferred at the Fair Market Value of the Shares on the date of transfer. Upon such a transfer, the person acquiring the Shares shall promptly notify the Secretary of the Company of such transfer. The right to purchase such Shares shall be provided to the Company for a period of thirty (30) days following receipt by the Company of written notice by the person acquiring the Shares.
(ii) Price for Involuntary Transfer. With respect to any stock to be transferred pursuant to Sections 3(a) or 3(c)(i), the Fair Market Value per Share shall be a price set by the Board of Directors of the Company (the “Board”) in good faith using a reasonable valuation method in a reasonable manner in accordance with Section 409A of the Code. The Company shall notify Purchaser or his or her executor of the price so determined within thirty (30) days after receipt by it of written notice of the transfer or proposed transfer of Shares. The determination of the Fair Market Value per Share by the Board shall be final and binding on all parties.
(d) Drag Along Right.
(i) If the Required Holder (as defined below) approves the sale of the Company, whether by merger, consolidation, sale of outstanding capital stock, sale of all or substantially all of its assets or otherwise (any of the foregoing, an “Approved Sale”), (1) Purchaser shall consent to, vote for and raise no objections against, and waive dissenters and appraisal rights (if any) with respect to, the Approved Sale, (2) if the Approved Sale is structured as a sale of stock, Purchaser shall agree to sell and shall be permitted to sell all of Purchaser’s Shares on the terms and conditions approved by the Required Holder, and (3) if the Approved Sale includes the sale, exchange, redemption, cancellation or other disposition of securities convertible into or exchangeable for capital stock of the Company, or options, warrants or other rights to purchase such capital stock or securities, Purchaser shall sell, exchange, redeem, agree to cancel or otherwise dispose of such securities or options, warrants or other rights on the terms and conditions approved by the Required Holder. In order to effect the covenant set forth in clause (1) of the immediately preceding sentence, Purchaser shall be deemed to have granted to the Company with respect to all of Purchaser’s Shares an irrevocable proxy (which is deemed to be coupled with an interest) with respect to any stockholder vote or action by written consent solely to effect such Approved Sale in compliance with this Section 3(d). Purchaser shall take all necessary and desirable actions in connection with the consummation of an Approved Sale. As used herein, the term “Required Holder” means, as of any date, any one or more of the Kaplan Parties.
(ii) The obligations of Purchaser with respect to an Approved Sale are subject to the satisfaction of the conditions that: (1) upon the consummation of the Approved Sale, all of the holders of Common Stock shall receive the same form and amount of consideration per share of Common Stock, or if any holder of Common Stock is given an option as to the form and amount of consideration to be received in respect of Common Stock, all holders of Common Stock shall be given the same option; and (2) in the case of a holder of any securities referred to in clause (3) of paragraph (i) above, (I) in
the event such securities are vested, the holder shall receive in such Approved Sale, unless otherwise provided in the terms of any agreement or instrument governing or evidencing such security, either (x) the same securities or other property that such holder would have received if such holder had converted, exchanged or exercised such security immediately prior to such Approved Sale (after taking into account the conversion, exchange or exercise price applying to such security and any applicable tax obligations of the holder in connection with such conversion, exchange or exercise) or (y) a security convertible or exchangeable for, or option, warrant or right to purchase, capital stock or other securities of a successor entity having substantially equivalent value, or (II) in the case where such securities are not vested, unless otherwise provided in the terms of any agreement or instrument governing or evidencing such security, such securities shall be cancelled.
(iii) Purchaser shall be required to make substantially the same representations and warranties (but only to the extent that such representations and warranties relate to Purchaser’s ownership of Shares and his or her authority to execute such documents), customary covenants and other agreements, to the extent reasonably related to the Approved Sale, as the Required Holder has agreed to make in connection with the proposed Approved Sale. Purchaser acknowledges that his or her pro rata share (based upon the number of Shares owned by such holder) of the aggregate proceeds of an Approved Sale may be reduced by transaction expenses related to such Approved Sale. Purchaser shall be obligated to join on a pro rata basis in any indemnification or other obligations that the Required Holder agrees to provide in connection with such Approved Sale; provided, however, that Purchaser shall not be obligated in connection with such Approved Sale to agree to indemnify or hold harmless any person with respect to (1) the representations and warranties of any other holder of Common Stock regarding its ownership of Common Stock or (2) an amount in excess of the net proceeds received by Purchaser in connection with such Approved Sale.
(e) Clawback of Shares on Termination For Cause. Purchaser acknowledges that in the event of termination of Purchaser’s Continuous Service status for Cause, the Committee shall have authority to effect such procedures and take such actions as are necessary to carry out the legal intent of Section 10 of the Plan, including such procedures and actions as are required to cause Purchaser to return to the Company Shares purchased under the Option that have been purchased or that vested within six months of the events giving rise to the for-Cause termination of Purchaser’s Continuous Service status and, if such Shares have been transferred by Purchaser, to remit to the Company the value of such transferred Shares, also as set forth in Section 10 of the Plan.
(f) Assignment. The right of the Company to purchase any part of the Shares may be assigned in whole or in part to any stockholder or stockholders of the Company or other persons or organizations.
(g) Restrictions Binding on Transferees. All transferees of Shares or any interest therein will receive and hold such Shares or interest subject to the provisions of this Agreement. Any sale or transfer of the Company’s Shares shall be void unless the provisions of this Agreement are satisfied.
(h) Termination of Rights Following Initial Public Offering. The right of repurchase granted by the Company in Section 3(a) above, the restrictions on transfer provided in Section 3(b) above, the option to repurchase the Shares in the event of an involuntary transfer granted the Company by Section 3(c) above and the drag-along right provided in Section 3(d) above shall terminate upon the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act. Upon termination of the rights to repurchase and the right of first refusal described in Sections 3(a), 3(b), 3(c) and 3(d) above, a new certificate or certificates representing the Shares not repurchased shall be issued, on request, without the legend referred to in Section 6(a)(ii) herein and delivered to Purchaser.
4. Taxation Representations. In connection with the purchase of the Shares, Purchaser represents to the Company the following:
(a) Purchaser understands that Purchaser may suffer adverse tax consequences as a result of Purchaser’s purchase or disposition of the Shares. Purchaser represents that Purchaser has consulted any tax consultants Purchaser deems advisable in connection with the purchase or disposition of the Shares and that Purchaser is not relying on the Company for any tax advice.
(b) Purchaser understands that the per share “Exercise Price” for the Options is intended to be at least equal to the fair market value of the Company’s Common Stock at the date of grant and that the Company has attempted in good faith to make the fair market value determination in compliance with applicable tax law although there can be no certainty that the IRS will agree. Purchaser understands that if the IRS does not agree and asserts that the fair market value at the time of grant is higher than the Exercise Price, the IRS could seek to impose greater taxes on Purchaser, including, without limitation, interest and penalties under Internal Revenue Code Section 409A.
5. Regulation D Representations. Purchaser hereby makes the following representations and warranties to the Company as of the date hereof:
(a) Experience; Status.
(i) Purchaser has experience in analyzing and investing in companies like the Company and is capable of evaluating the merits and risks of its investment in the Company and has the capacity to protect its own interests. To the extent necessary, Purchaser has retained, at its own expense, and relied upon, appropriate professional advice regarding the investment, tax and legal merits and consequences of the Shares, it being understood that the Company has not retained legal or financial advisors on behalf of Purchaser.
(ii) Purchaser is an Accredited Investor (as such term is used in Rule 501 under the Securities Act), is able to bear the economic risk of its investment in the Company and has sufficient net worth to sustain a loss of its entire investment in the Company without economic hardship if such loss should occur. The Questionnaire
attached hereto as Annex 1 and completed by Purchaser is true and correct and incorporated herein by reference.
(b) Access to Company Information.
(i) Purchaser has had an opportunity to discuss the Company’s business, management and financial affairs with the members of the Company’s management and has had the opportunity to review the Company’s facilities. Purchaser has also had an opportunity to ask questions of the officers of the Company, which questions were answered to its satisfaction. Purchaser acknowledges that it is familiar with all aspects of the Company’s business.
(ii) Purchaser has received no representations or warranties from the Company, or its employees, affiliates, attorneys, accountants or agents.
(iii) Purchaser understands that an investment in the Company involves numerous risks.
(c) Investment Purposes; Rule 144.
(i) Purchaser is acquiring the Shares solely for investment for Purchaser’s own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof. Purchaser understands that the Shares have not been registered under the Securities Act or applicable state and other securities laws by reason of a specific exemption from the registration provisions of the Securities Act and applicable state and other securities laws, the availability of which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of Purchaser’s representations as expressed herein. Purchaser understands that the Company is relying, in part, upon the representations and warranties contained in this agreement for the purpose of determining whether this transaction meets the requirements for such exemptions.
(ii) Purchaser acknowledges and understands that Purchaser must bear the economic risk of Purchaser’s investment in the Shares for an indefinite period of time because the Shares are not transferable except in very limited circumstances and must be held indefinitely unless subsequently registered under the Securities Act and applicable state and other securities laws or unless an exemption from such registration is available. Purchaser understands that the Company has not agreed to and does not plan to file a registration statement to register the resale of the Shares and any securities to be received in respect thereof under the Securities Act.
(iii) Purchaser is aware of the current provisions of Rule 144 promulgated under the Securities Act which permit resale of securities purchased in a private placement subject to the satisfaction of certain conditions, including, among other things, the availability of certain current public information about the issuer of the securities and the resale occurring not less than one year after a party has purchased from an issuer or its affiliate and paid the full purchase price for the securities to be sold. Purchaser understands that if the Company otherwise agrees to a transfer of the Shares,
the Company will not transfer and any transfer agent of the Company will be issued stop-transfer instructions with respect to such Shares unless such transfer is subsequently registered under the Securities Act and applicable state and other securities laws or unless an exemption from such registration is available.
6. Restrictive Legends and Stop-Transfer Orders.
(a) Legends. The certificate or certificates representing the Shares shall bear the following legends (as well as any legends required by applicable state and federal corporate and securities laws):
(i) THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR UNDER ANOTHER EXEMPTION AVAILABLE UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
(ii) THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
(b) Stop-Transfer Notices. Purchaser agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.
(c) Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Agreement or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred.
7. No Employment Rights. Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a parent or subsidiary of the Company, to terminate Purchaser’s employment or consulting relationship, for any reason, with or without Cause.
8. Lock-Up Agreement. In connection with the initial public offering of the Company’s securities and upon request of the Company or the underwriters managing any underwritten offering of the Company’s securities, Purchaser agrees not to lend, offer, pledge, contract to sell, sell any option or contract to transfer, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer, directly or indirectly, any
securities of the Company owned immediately before the effective date of the registration statement for such offering (other than a sale of any securities of the Company to an underwriter pursuant to an underwriting agreement if all officers, directors and stockholders of more than five percent of the Company’s outstanding equity securities are subject to the same restrictions) without the prior written consent of the Company or such underwriters for such period of time (not to exceed 180 days, which period may be extended upon the request of the managing underwriter for an additional period of up to 15 days if the Company issues or proposes to issue an earnings or other public release within 15 days of the expiration of the 180 day lock-up period) from the effective date of such registration and to execute an agreement as may be reasonably requested by the Company or the underwriters in connection with such registration and to use its commercially reasonable efforts to provide, within five business days of a request, such information as may be required by the Company or the underwriters in connection with the completion of the initial public offering of the Company’s securities.
9. Tax Consequences. Purchaser should obtain advice from an appropriate independent professional adviser with respect to the taxation implications of the grant, issuance, purchase, retention, assignment, release, cancellation, sale or any other disposal of the Shares (each, a “Trigger Event”). Purchaser should also take advice in respect of the taxation indemnity provisions under Section 10 below.
10. Purchaser’s Taxation Indemnity.
(a) To the extent permitted by law, Purchaser hereby agrees to indemnify and keep indemnified the Company and the Company as trustee for and on behalf of any affiliate entity, in respect of any liability or obligation of the Company and/or any affiliate entity to account for income tax or any other taxation provisions under the laws of Purchaser’s country of citizenship and/or residence to the extent arising from a Trigger Event.
(b) The Company shall not be obliged to allot and issue any of the Shares or any interest in the Shares unless and until Purchaser has paid to the Company such sum as is, in the opinion of the Company, sufficient to indemnify the Company in full against any liability the Company has for any amount of, or representing, income tax or any other tax arising from a Trigger Event (the “Shares Tax Liability”), or Purchaser has made such other arrangement as in the opinion of the Company will ensure that the full amount of any Shares Tax Liability will be recovered from Purchaser within such period as the Company may then determine.
11. Data Protection.
(a) To facilitate the administration of the Plan and this Agreement, it will be necessary for the Company (or its payroll administrators) to collect, hold and process certain personal information about Purchaser and to transfer this data to certain third parties such as brokers with whom Purchaser may elect to deposit any share capital under the Plan. Purchaser consents to the Company (or its payroll administrators) collecting, holding and processing Purchaser’s personal data and transferring this data to the Company or any other third parties insofar as is reasonably necessary to implement, administer and manage the Plan.
(b) Purchaser understands that Purchaser may, at any time, view Purchaser’s personal data, require any necessary corrections to it or withdraw the consents herein in writing by contacting the Company, but acknowledges that without the use of such data it may not be practicable for the Company to administer Purchaser’s involvement in the Plan in a timely fashion or at all and this may be detrimental to Purchaser.
12. Miscellaneous.
(a) Governing Law. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed by and construed in accordance with the Laws of the State of New York (including Section 5-1401 of the General Obligations Law of the State of New York but otherwise without regard to conflicts of Laws principles).
(b) Dispute Resolution and Arbitration. The Company and Purchaser shall attempt in good faith to resolve any dispute arising out of or relating to this Agreement promptly by negotiation. If the matter has not been resolved within thirty (30) calendar days of a party’s request for negotiation, either party may initiate proceedings or arbitration only as provided herein. If any dispute arising out of or relating to this Agreement or the breach, termination or validity thereof has not been resolved by negotiation, such dispute shall be settled by binding arbitration in accordance with the then current rules of JAMS by a single independent and impartial arbitrator who is located in Denver, Colorado. The arbitrator selected must have an expertise in the matter(s) in dispute. Each party shall bear his/her/its own fees and costs; the fees, costs and all administrative expenses of arbitration shall be borne equally by the Company and Purchaser. The parties understand and agree that the arbitration is subject to the rules of JAMS; that the arbitrator’s decision and award shall be final and binding as to all claims that were, or could have been, raised in arbitration; and that judgment upon the award rendered by the arbitrator may be entered in any court having competent jurisdiction. Any award rendered hereunder may include an award of attorneys’ fees and costs but shall not include punitive damages. The statute of limitations of the state of New York applicable to the commencement of a lawsuit shall apply to the commencement of an arbitration.
(c) Entire Agreement; Enforcement of Rights. This Agreement, the Option Agreement and the Plan set forth the entire agreement and understanding of the parties relating to the subject matter herein and merges all prior discussions between them. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing signed by the parties to this Agreement. The failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of any rights of such party.
(d) Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms.
(e) Construction. This Agreement is the result of negotiations between and has been reviewed by each of the parties hereto and their respective counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against any one of the parties hereto.
(f) Notices. Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, sent by reputable overnight courier service or mailed by first class mail, return receipt requested, to the recipient at the address in the Company’s personnel files and to the Company as indicated below:
Notices to the Company:
Sunshine Silver Mining & Refining Corporation
8400 E. Crescent Parkway, Suite 600
Greenwood Village, CO 80111
or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Agreement shall be deemed to have been given when so delivered, sent or mailed.
(g) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.
(h) Successors and Assigns. The rights and benefits of this Agreement shall inure to the benefit of, and be enforceable by the Company’s successors and assigns. The rights and obligations of Purchaser under this Agreement may only be assigned with the prior written consent of the Company.
[Signature Page Follows]
The parties have executed this Exercise Notice as of the date first set forth above.
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I, , spouse of , have read and hereby approve the foregoing Agreement. In consideration of the Company’s granting my spouse the right to purchase the Shares as set forth in the Agreement, I hereby agree to be irrevocably bound by the Agreement and further agree that any community property or other such interest shall hereby be similarly bound by the Agreement. I hereby appoint my spouse as my attorney-in-fact with respect to any amendment or exercise of any rights under the Agreement.
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Annex 1
QUESTIONNAIRE
The undersigned represents and warrants that it comes within each category marked below, and that for any category marked, it has truthfully set forth the factual basis or reason the undersigned comes within that category. The undersigned agrees to furnish any additional information which Sunshine Silver Mining & Refining Corporation (the “Company”) deems necessary in order to verify the answers set forth below.
o (a) The undersigned is an individual (not a partnership, corporation, etc.) whose individual net worth, or joint net worth with its spouse, presently exceeds $1,000,000.
Explanation. In calculating net worth you may include equity in personal property and real estate (other than your primary residence) cash, short-term investments, stock and securities. Equity in personal property and real estate should be based on the fair market value of such property less debt secured by such property. You must exclude from the calculation the value of your primary residence, and the related amount of indebtedness up to the fair market value of the residence may also be excluded. Indebtedness secured by the residence in excess of its fair market value must be deducted from your net worth.
o (b) The undersigned is an individual (not a partnership, corporation, etc.) who had an income in excess of $200,000 in each of the two most recent years, or joint income with their spouse in excess of $300,000 in each of those years (in each case including foreign income, tax exempt income and full amount of capital gains and loses but excluding any income of other family members and any unrealized capital appreciation) and has a reasonable expectation of reaching the same income level in the current year.
o (c) The undersigned is a director or executive officer of the Company, which is issuing the Shares.
o (d) The undersigned is not within any of the categories above and is therefore a nonaccredited investor.
THE UNDERSIGNED IS INFORMED OF THE SIGNIFICANCE TO THE COMPANY OF THE FOREGOING REPRESENTATIONS, AND THEY ARE MADE WITH THE INTENTION THAT THE COMPANY WILL RELY ON THEM.
IN WITNESS WHEREOF, the undersigned has executed the Questionnaire on , .
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DIRECTOR NONQUALIFIED STOCK OPTION AGREEMENT
AGREEMENT by and between SUNSHINE SILVER MINING & REFINING CORPORATION, a Delaware corporation (the “Company”), and [·] (the “Optionee”).
Pursuant to the Sunshine Silver Mining & Refining Corporation Long Term Incentive Plan (as it may be further amended from time to time, the “Plan”), the Company desires to grant to the Optionee, and the Optionee desires to accept from the Company, an option to purchase shares of the common stock of the Company, par value $.001 per share (the “Common Stock”), upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, the Company and the Optionee agree as follows:
1. Grant of Options; Option Price. Effective [·] (the “Grant Date”), the Company hereby grants to the Optionee options to purchase [·] shares of Common Stock (the “Options”), based on the Company’s valuation as of the Grant Date. The Options are intended to be treated as options that are not incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).
There are potential tax consequences associated with the grant, vesting and exercise of the Options. It is the responsibility of the Optionee to seek independent tax advice with regard to the tax treatment of the Options, the exercise thereof, the disposition of any Common Stock acquired upon exercise of the Options and any other related matters.
2. Option Price. The purchase price for each Option is $[·], and upon exercise each Option entitles the holder to acquire one share of Common Stock. The purchase price per Option is not less than the fair market value of a share of Common Stock on the Grant Date.
3. Entitlement to Exercise Option; Term of Option.
(a) Subject to the terms of this Agreement and the Plan, your option award to purchase [·] shares shall become exercisable in accordance with the following vesting schedule commencing on the [·], (the “Vesting Start Date”), provided that the Optionee has been in Continuous Service following the Vesting Start Date:
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Percent of Options
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First Month Anniversary of Vesting Start Date |
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8 1/3 |
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Second Month Anniversary of Vesting Start Date |
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8 1/3 |
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Third Month Anniversary of Vesting Start Date |
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8 1/3 |
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Fourth Month Anniversary of Vesting Start Date |
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8 1/3 |
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Fifth Month Anniversary of Vesting Start Date |
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8 1/3 |
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Sixth Month Anniversary of Vesting Start Date |
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8 1/3 |
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Seventh Month Anniversary of Vesting Start Date |
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8 1/3 |
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Eighth Month Anniversary of Vesting Start Date |
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8 1/3 |
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Ninth Month Anniversary of Vesting Start Date |
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8 1/3 |
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Tenth Month Anniversary of Vesting Start Date |
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8 1/3 |
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Eleventh Month Anniversary of Vesting Start Date |
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8 1/3 |
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First Year Anniversary of Vesting Start Date |
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8 1/3 |
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Sunshine Silver Mining & Refining Corporation Long Term Incentive Plan NQSO Agreement
Except as provided in paragraph (b) below, the Options shall become exercisable on the vesting date shown in the table above. To the extent that the vesting schedule results in the vesting of any fractional share on a vesting date prior to the final vesting date, the number of shares vested on such vesting date will be rounded up to the nearest whole number.
Unless sooner terminated pursuant to the terms of this Agreement, the Options will expire if and to the extent not exercised on or before the tenth anniversary of the Grant Date.
Notwithstanding the foregoing, if the Optionee’s Continuous Service terminates due to his or her removal or failure to be re-nominated other than for cause, any Options which remain unvested shall immediately vest and become exercisable. In all other circumstances of termination of the Optionee’s Continuous Service, any Options which are not vested shall be forfeited immediately.
4. Exercise of Option; Method of Payment. (a) Subject to the requirements of Section 2 of the attached Exercise Notice, vested Options may be exercised at any time or from time to time prior to their expiry date. To exercise the Option, the Optionee shall deliver to the Company: (i) a written notice specifying the number of Options to be exercised, and (ii) payment in full of the exercise price, together with the amount, if any, deemed necessary by the Company to enable it to satisfy any federal, state, local or foreign tax or withholding obligations with respect to the exercise of the Options.
(b) The method of payment for exercising Options may be one or a combination of the following: (i) cash or check payable in clearinghouse funds to the order of the Company; (ii) if permitted by the Committee (as defined by under the Plan), by delivery to the Company of other shares of Common Stock which, unless otherwise determined by the Committee, have been held for more than six (6) months; (iii) if permitted by the Committee, by a “net exercise” arrangement (as described in the Plan); or (iv) any other form of legal consideration that may be acceptable to the Committee.
(c) The Optionee shall deliver the signed Exercise Notice, in the form provided in Exhibit A, as a condition of exercise of any Options.
5. Rights as a Stockholder. No shares of Common Stock will be issued or delivered pursuant to an exercise of an Option until full payment for such shares has been made and arrangements to satisfy tax withholding requirements have been made to the satisfaction of the Company pursuant to Section 16 of the Plan. The Optionee shall not be deemed to be, or have any rights as, a stockholder with respect to any shares covered by the Options until a stock certificate for such shares has been issued to the Optionee. Except as otherwise provided herein, no adjustment shall be made for dividends or distributions or other rights for which the record date is prior to the date of issuance of such stock certificate.
6. Nontransferability of Options. The Options are not assignable or transferable except by will or by the applicable laws of descent and distribution. The Options are exercisable during the Optionee’s lifetime only by the Optionee or in the case of Disability, by the Optionee’s legal guardian.
7. Period to Exercise After Termination. (a) If the Optionee’s Continuous Service with the Company or any Subsidiary terminates, then, unless sooner terminated under the terms hereof or pursuant to the Plan, unvested Options (except those that vest as provided in Section 3(b)) will terminate immediately and vested Options (including those that vest as provided in Section 3(b)) will terminate on the third-year anniversary of the date of the Optionee’s termination of Continuous Service.
(b) Notwithstanding any other provision of this Agreement, if the Optionee’s Continuous Service terminates by reason of the Optionee’s termination for cause, all vested and unvested Options will immediately cease to be exercisable and will be forfeited.
(c) During any period following the termination of the Optionee’s Continuous Service in which the Options remain exercisable and during which the shares of Common Stock are not publicly traded, the Company may, in its sole discretion cancel such Option by paying the Optionee the difference between (i) the Fair Market Value of the shares of Common Stock subject to the Options and (ii) the purchase price of the Options, net of applicable withholding taxes. For this purpose, Fair Market Value will be determined in accordance with Section 3(c)(ii) of the attached Exercise Notice.
8. Plan Provisions Control. This Agreement is subject to the terms and conditions of the Plan, which are incorporated herein by reference. Notwithstanding anything to the contrary contained herein, the provisions of the Plan shall govern if and to the extent that there are inconsistencies between the provisions of the Plan and the provisions of this Agreement. The Optionee acknowledges that the Optionee has received a copy of the Plan prior to the execution of this Agreement. Capitalized terms not otherwise defined herein shall have the same meanings set forth in the Plan for such terms.
9. No Rights Conferred. Nothing in this Agreement shall give the Optionee any right to continue in the employ or service of the Company or any Subsidiary and/or as a member of the
Company’s Board of Directors or in any other capacity, or interfere in any way with the right of the Company or any Subsidiary to terminate the employment or services of the Optionee.
10. Change of Control; Adjustments. Upon the consummation of a Change of Control, any Option that is not continued, assumed (or substituted) by the Company (or surviving corporation or ultimate parent corporation in a Change of Control transaction) shall vest and become fully exercisable. All references to the number and class of shares covered by this Agreement, the exercise price per share of each Option, and other terms in this Agreement may be appropriately adjusted, in the discretion of the Committee, in the event of certain changes in capitalization, as set forth in Section 9 of the Plan.
11. Securities Law and Other Requirements. Exercise of an Option is subject to compliance with applicable securities and other laws, rules and regulations, including without limitation as set forth in Section 15 of the Plan, and the Company may defer exercise of an Option to ensure compliance with such laws, rules and regulations.
12. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and permitted assigns. This Agreement may not be assigned or transferred in whole or in part except as provided in the Plan.
13. Interpretation of this Agreement. All determinations and interpretations made by the Committee with regard to any questions arising under the Plan or this Agreement shall be final, binding and conclusive as to all persons, including without limitation the Optionee and any person claiming rights from or through the Optionee.
14. Dispute Resolution and Arbitration. The Company and the Optionee shall attempt in good faith to resolve any dispute arising out of or relating to this Agreement promptly by negotiation. If the matter has not been resolved within thirty (30) calendar days of a party’s request for negotiation, either party may initiate proceedings or arbitration only as provided herein. If any dispute arising out of or relating to this Agreement or the breach, termination or validity thereof has not been resolved by negotiation, such dispute shall be settled by binding arbitration in accordance with the then current rules of JAMS by a single independent and impartial arbitrator who is located in Denver, Colorado. The arbitrator selected must have an expertise in the matter(s) in dispute. Each party shall bear his/her/its own fees and costs; the fees, costs and all administrative expenses of arbitration shall be borne equally by the Company and the Optionee. The parties understand and agree that the arbitration is subject to the rules of JAMS; that the arbitrator’s decision and award shall be final and binding as to all claims that were, or could have been, raised in arbitration; and that judgment upon the award rendered by the arbitrator may be entered in any court having competent jurisdiction. Any award rendered hereunder may include an award of attorneys’ fees and costs but shall not include punitive damages. The statute of limitations of the state of New York applicable to the commencement of a lawsuit shall apply to the commencement of an arbitration.
15. Governing Law; Entire Agreement. This Agreement shall be governed by and construed in accordance with the Laws of the State of New York (including Section 5-1401 of the General Obligations Law of the State of New York but otherwise without regard to conflicts of laws
principles). The Plan and this Agreement constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior understandings and agreements, written or oral, of the parties hereto with respect to the subject matter hereof. This Agreement may be amended by the Committee, subject to the Optionee’s consent if such amendment is not favorable to the Optionee, except that the consent of the Optionee shall not be required for any amendment made pursuant to Section 8 or Section 9 of the Plan.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.
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SUNSHINE SILVER MINING & REFINING CORPORATION |
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EXHIBIT A
FORM OF OPTION EXERCISE NOTICE
TO BE SIGNED UPON ELECTION TO EXERCISE OPTIONS
SUNSHINE SILVER MINING & REFINING CORPORATION
STOCK OPTION AND LONG TERM INCENTIVE PLAN
EXERCISE NOTICE
This Agreement (“Agreement”) is made as of , by and between Sunshine Silver Mining & Refining Corporation, a Delaware corporation (the “Company”), and (“Purchaser”). To the extent any capitalized terms used in this Agreement are not defined, they shall have the meaning ascribed to them in the Company’s Stock Option and Long Term Incentive Plan (the “Plan”).
1. Exercise of Option. Subject to the terms and conditions hereof, Purchaser hereby elects to exercise options to purchase shares of the Common Stock (the “Shares”) of the Company under and pursuant to the Plan and the Stock Option Agreement granted on , (the “Option Agreement”). The purchase price for the Shares shall be $ per Share for a total purchase price of $ . The term “Shares” refers to the purchased Shares and all securities received in replacement of the Shares or as stock dividends or splits, all securities received in replacement of the Shares in a recapitalization, merger, reorganization, exchange or the like, and all new, substituted or additional securities or other properties to which Purchaser is entitled by reason of Purchaser’s ownership of the Shares.
2. Time and Place of Exercise. The purchase and sale of the Shares under this Agreement shall occur at the principal office of the Company simultaneously with the delivery of this executed Agreement and payment of the exercise price and payment of all applicable taxes in accordance with the provisions of Section 4 of the Option Agreement. Promptly or as soon as practicable thereafter, if the Shares are certificated, the Company will deliver to Purchaser (or hold in escrow) a certificate representing the Shares to be purchased by Purchaser (which shall be issued in Purchaser’s name or to the order of Purchaser if the Shares are publicly traded on any stock exchange or over-the-counter market and the Shares have been registered under the Securities Act of 1933, as amended (the “Securities Act”)).
3. Limitations on Transfer. In addition to any other limitation on transfer created by applicable securities laws, Purchaser shall not assign, encumber or dispose of any interest in the Shares except in compliance with the provisions below and applicable securities laws.
(a) Private Company. Purchaser acknowledges that the Company shall have the right, but not the obligation, at any time following the termination of Purchaser’s Continuous
Service for any reason or after exercise of an Option if the Option is exercised after termination of Purchaser’s Continuous Service for any reason, to repurchase all or part of the Shares (the “Repurchase Right”). The repurchase price shall be the Fair Market Value of those Shares as of the date the Repurchase Right is exercised. The Fair Market Value per Share will be determined as set forth in Section 3(c)(ii) of this Agreement.
(i) Procedure. The Repurchase Right shall be exercised by the Company or its assigns by giving Purchaser written notice of the Company’s intention to exercise the Repurchase Right. Upon such notification, Purchaser shall promptly surrender to the Company, free and clear of any liens or encumbrances, any certificates representing the Shares being purchased, together with a duly executed stock power for the transfer of such Shares to the Company or the Company’s assignee or assignees. Upon the Company’s or its assignee’s receipt of the certificates from Purchaser, the Company or its assignee or assignees shall, as soon as practicable following the determination of the Fair Market Value of the shares of Common Stock being purchased, (1) deliver to Purchaser a check in the amount of the aggregate Repurchase Price, (2) cancel an amount of Purchaser’s indebtedness to the Company, if any, equal to the Repurchase Price, or (3) by a combination of (1) and (2) so that the combined payment and cancellation of indebtedness equals the Repurchase Price. Upon delivery of such notice and the payment of the Repurchase Price (by one of the methods specified in the previous sentence), the Company shall become the legal and beneficial owner of the Shares being repurchased and all rights and interests therein or relating thereto, and the Company shall have the right to retain and transfer to its own name the number of Shares being repurchased by the Company.
(ii) Assignment of Repurchase Right. Whenever the Company shall have the right to repurchase shares of Common Stock hereunder, the Company may designate and assign one or more employees, officers, directors or shareholders of the Company or other persons or organizations to exercise all or a part of the Company’s Repurchase Right and purchase all or a part of such Shares.
(b) No Other Transfer Permitted.
(i) General Rule. Except as otherwise permitted by the Company in writing or pursuant to Section 3(b)(ii), no Shares held by Purchaser or any transferee of Purchaser may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.
(ii) Estate Planning Transfers. Notwithstanding any other provisions of the Plan and this Agreement to the contrary, Purchaser may, with the consent of the Company, such consent not to be unreasonably withheld, assign the Shares for bona fide estate planning purposes by Purchaser to his or her issue, or to a trustee or trustees of a trust whose vested beneficiaries then include any such of Purchaser’s kindred, if (i) the persons who would control the Shares and the proposed arrangements for the control of the Shares are reasonably satisfactory to the Company, including, without limitation, that any Shares will remain subject to all of the forfeiture and transfer restrictions and
conditions set forth herein and in the Plan and (ii) the requirements of the Securities Act and any applicable state securities or blue sky laws are met.
(c) Involuntary Transfer.
(i) Company’s Right to Purchase upon Involuntary Transfer. In the event, at any time after the date of this Agreement, of any transfer by operation of law or other involuntary transfer (including death or divorce) of all or a portion of the Shares by the record holder thereof, the Company shall have an option to purchase all of the Shares transferred at the Fair Market Value of the Shares on the date of transfer. Upon such a transfer, the person acquiring the Shares shall promptly notify the Secretary of the Company of such transfer. The right to purchase such Shares shall be provided to the Company for a period of thirty (30) days following receipt by the Company of written notice by the person acquiring the Shares.
(ii) Price for Involuntary Transfer. With respect to any stock to be transferred pursuant to Sections 3(a) or 3(c)(i), the Fair Market Value per Share shall be a price set by the Board of Directors of the Company (the “Board”) in good faith using a reasonable valuation method in a reasonable manner in accordance with Section 409A of the Code. The Company shall notify Purchaser or his or her executor of the price so determined within thirty (30) days after receipt by it of written notice of the transfer or proposed transfer of Shares. The determination of the Fair Market Value per Share by the Board shall be final and binding on all parties.
(d) Drag Along Right.
(i) If the Required Holder (as defined below) approves the sale of the Company, whether by merger, consolidation, sale of outstanding capital stock, sale of all or substantially all of its assets or otherwise (any of the foregoing, an “Approved Sale”), (1) Purchaser shall consent to, vote for and raise no objections against, and waive dissenters and appraisal rights (if any) with respect to, the Approved Sale, (2) if the Approved Sale is structured as a sale of stock, Purchaser shall agree to sell and shall be permitted to sell all of Purchaser’s Shares on the terms and conditions approved by the Required Holder, and (3) if the Approved Sale includes the sale, exchange, redemption, cancellation or other disposition of securities convertible into or exchangeable for capital stock of the Company, or options, warrants or other rights to purchase such capital stock or securities, Purchaser shall sell, exchange, redeem, agree to cancel or otherwise dispose of such securities or options, warrants or other rights on the terms and conditions approved by the Required Holder. In order to effect the covenant set forth in clause (1) of the immediately preceding sentence, Purchaser shall be deemed to have granted to the Company with respect to all of Purchaser’s Shares an irrevocable proxy (which is deemed to be coupled with an interest) with respect to any stockholder vote or action by written consent solely to effect such Approved Sale in compliance with this Section 3(d). Purchaser shall take all necessary and desirable actions in connection with the consummation of an Approved Sale. As used herein, the term “Required Holder” means, as of any date, any one or more of the Kaplan Parties.
(ii) The obligations of Purchaser with respect to an Approved Sale are subject to the satisfaction of the conditions that: (1) upon the consummation of the Approved Sale, all of the holders of Common Stock shall receive the same form and amount of consideration per share of Common Stock, or if any holder of Common Stock is given an option as to the form and amount of consideration to be received in respect of Common Stock, all holders of Common Stock shall be given the same option; and (2) in the case of a holder of any securities referred to in clause (3) of paragraph (i) above, (I) in the event such securities are vested, the holder shall receive in such Approved Sale, unless otherwise provided in the terms of any agreement or instrument governing or evidencing such security, either (x) the same securities or other property that such holder would have received if such holder had converted, exchanged or exercised such security immediately prior to such Approved Sale (after taking into account the conversion, exchange or exercise price applying to such security and any applicable tax obligations of the holder in connection with such conversion, exchange or exercise) or (y) a security convertible or exchangeable for, or option, warrant or right to purchase, capital stock or other securities of a successor entity having substantially equivalent value, or (II) in the case where such securities are not vested, unless otherwise provided in the terms of any agreement or instrument governing or evidencing such security, such securities shall be cancelled.
(iii) Purchaser shall be required to make substantially the same representations and warranties (but only to the extent that such representations and warranties relate to Purchaser’s ownership of Shares and his or her authority to execute such documents), customary covenants and other agreements, to the extent reasonably related to the Approved Sale, as the Required Holder has agreed to make in connection with the proposed Approved Sale. Purchaser acknowledges that his or her pro rata share (based upon the number of Shares owned by such holder) of the aggregate proceeds of an Approved Sale may be reduced by transaction expenses related to such Approved Sale. Purchaser shall be obligated to join on a pro rata basis in any indemnification or other obligations that the Required Holder agrees to provide in connection with such Approved Sale; provided, however, that Purchaser shall not be obligated in connection with such Approved Sale to agree to indemnify or hold harmless any person with respect to (1) the representations and warranties of any other holder of Common Stock regarding its ownership of Common Stock or (2) an amount in excess of the net proceeds received by Purchaser in connection with such Approved Sale.
(e) Clawback of Shares on Termination For Cause. Purchaser acknowledges that in the event of termination of Purchaser’s Continuous Service status for cause, the Committee shall have authority to effect such procedures and take such actions as are necessary to carry out the legal intent of Section 10 of the Plan, including such procedures and actions as are required to cause Purchaser to return to the Company Shares purchased under the Option that have been purchased or that vested within six months of the events giving rise to the for-Cause termination of Purchaser’s Continuous Service status and, if such Shares have been transferred by Purchaser, to remit to the Company the value of such transferred Shares, also as set forth in Section 10 of the Plan.
(f) Assignment. The right of the Company to purchase any part of the Shares may be assigned in whole or in part to any stockholder or stockholders of the Company or other persons or organizations.
(g) Restrictions Binding on Transferees. All transferees of Shares or any interest therein will receive and hold such Shares or interest subject to the provisions of this Agreement. Any sale or transfer of the Company’s Shares shall be void unless the provisions of this Agreement are satisfied.
(h) Termination of Rights Following Initial Public Offering. The right of repurchase granted by the Company in Section 3(a) above, the restrictions on transfer provided in Section 3(b) above, the option to repurchase the Shares in the event of an involuntary transfer granted the Company by Section 3(c) above and the drag-along right provided in Section 3(d) above shall terminate upon the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act. Upon termination of the rights to repurchase and the right of first refusal described in Sections 3(a), 3(b), 3(c) and 3(d) above, a new certificate or certificates representing the Shares not repurchased shall be issued, on request, without the legend referred to in Section 6(a)(ii) herein and delivered to Purchaser.
4. Taxation Representations. In connection with the purchase of the Shares, Purchaser represents to the Company the following:
(a) Purchaser understands that Purchaser may suffer adverse tax consequences as a result of Purchaser’s purchase or disposition of the Shares. Purchaser represents that Purchaser has consulted any tax consultants Purchaser deems advisable in connection with the purchase or disposition of the Shares and that Purchaser is not relying on the Company for any tax advice.
(b) Purchaser understands that the per share “Exercise Price” for the Options is intended to be at least equal to the fair market value of the Company’s Common Stock at the date of grant and that the Company has attempted in good faith to make the fair market value determination in compliance with applicable tax law although there can be no certainty that the IRS will agree. Purchaser understands that if the IRS does not agree and asserts that the fair market value at the time of grant is higher than the Exercise Price, the IRS could seek to impose greater taxes on Purchaser, including, without limitation, interest and penalties under Internal Revenue Code Section 409A.
5. Regulation D Representations. Purchaser hereby makes the following representations and warranties to the Company as of the date hereof:
(a) Experience; Status.
(i) Purchaser has experience in analyzing and investing in companies like the Company and is capable of evaluating the merits and risks of its investment in the Company and has the capacity to protect its own interests. To the extent necessary, Purchaser has retained, at its own expense, and relied upon, appropriate professional advice regarding the investment, tax and legal merits and consequences of the Shares, it
being understood that the Company has not retained legal or financial advisors on behalf of Purchaser.
(ii) Purchaser is an Accredited Investor (as such term is used in Rule 501 under the Securities Act), is able to bear the economic risk of its investment in the Company and has sufficient net worth to sustain a loss of its entire investment in the Company without economic hardship if such loss should occur. The Questionnaire attached hereto as Annex 1 and completed by Purchaser is true and correct and incorporated herein by reference.
(b) Access to Company Information.
(i) Purchaser has had an opportunity to discuss the Company’s business, management and financial affairs with the members of the Company’s management and has had the opportunity to review the Company’s facilities. Purchaser has also had an opportunity to ask questions of the officers of the Company, which questions were answered to its satisfaction. Purchaser acknowledges that it is familiar with all aspects of the Company’s business.
(ii) Purchaser has received no representations or warranties from the Company, or its employees, affiliates, attorneys, accountants or agents.
(iii) Purchaser understands that an investment in the Company involves numerous risks.
(c) Investment Purposes; Rule 144.
(i) Purchaser is acquiring the Shares solely for investment for Purchaser’s own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof. Purchaser understands that the Shares have not been registered under the Securities Act or applicable state and other securities laws by reason of a specific exemption from the registration provisions of the Securities Act and applicable state and other securities laws, the availability of which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of Purchaser’s representations as expressed herein. Purchaser understands that the Company is relying, in part, upon the representations and warranties contained in this agreement for the purpose of determining whether this transaction meets the requirements for such exemptions.
(ii) Purchaser acknowledges and understands that Purchaser must bear the economic risk of Purchaser’s investment in the Shares for an indefinite period of time because the Shares are not transferable except in very limited circumstances and must be held indefinitely unless subsequently registered under the Securities Act and applicable state and other securities laws or unless an exemption from such registration is available. Purchaser understands that the Company has not agreed to and does not plan to file a registration statement to register the resale of the Shares and any securities to be received in respect thereof under the Securities Act.
(iii) Purchaser is aware of the current provisions of Rule 144 promulgated under the Securities Act which permit resale of securities purchased in a private placement subject to the satisfaction of certain conditions, including, among other things, the availability of certain current public information about the issuer of the securities and the resale occurring not less than one year after a party has purchased from an issuer or its affiliate and paid the full purchase price for the securities to be sold. Purchaser understands that if the Company otherwise agrees to a transfer of the Shares, the Company will not transfer and any transfer agent of the Company will be issued stop-transfer instructions with respect to such Shares unless such transfer is subsequently registered under the Securities Act and applicable state and other securities laws or unless an exemption from such registration is available.
6. Restrictive Legends and Stop-Transfer Orders.
(a) Legends. The certificate or certificates representing the Shares shall bear the following legends (as well as any legends required by applicable state and federal corporate and securities laws):
(i) THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR UNDER ANOTHER EXEMPTION AVAILABLE UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
(ii) THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
(b) Stop-Transfer Notices. Purchaser agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.
(c) Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Agreement or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred.
7. No Service Rights. Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a parent or subsidiary of the Company, to terminate Purchaser’s service relationship, for any reason, with or without cause.
8. Lock-Up Agreement. In connection with the initial public offering of the Company’s securities and upon request of the Company or the underwriters managing any underwritten offering of the Company’s securities, Purchaser agrees not to lend, offer, pledge, contract to sell, sell any option or contract to transfer, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer, directly or indirectly, any securities of the Company owned immediately before the effective date of the registration statement for such offering (other than a sale of any securities of the Company to an underwriter pursuant to an underwriting agreement if all officers, directors and stockholders of more than five percent of the Company’s outstanding equity securities are subject to the same restrictions) without the prior written consent of the Company or such underwriters for such period of time (not to exceed 180 days, which period may be extended upon the request of the managing underwriter for an additional period of up to 15 days if the Company issues or proposes to issue an earnings or other public release within 15 days of the expiration of the 180 day lock-up period) from the effective date of such registration and to execute an agreement as may be reasonably requested by the Company or the underwriters in connection with such registration and to use its commercially reasonable efforts to provide, within five business days of a request, such information as may be required by the Company or the underwriters in connection with the completion of the initial public offering of the Company’s securities.
9. Tax Consequences. Purchaser should obtain advice from an appropriate independent professional adviser with respect to the taxation implications of the grant, issuance, purchase, retention, assignment, release, cancellation, sale or any other disposal of the Shares (each, a “Trigger Event”). Purchaser should also take advice in respect of the taxation indemnity provisions under Section 10 below.
10. Purchaser’s Taxation Indemnity.
(a) To the extent permitted by law, Purchaser hereby agrees to indemnify and keep indemnified the Company and the Company as trustee for and on behalf of any affiliate entity, in respect of any liability or obligation of the Company and/or any affiliate entity to account for income tax or any other taxation provisions under the laws of Purchaser’s country of citizenship and/or residence to the extent arising from a Trigger Event.
(b) The Company shall not be obliged to allot and issue any of the Shares or any interest in the Shares unless and until Purchaser has paid to the Company such sum as is, in the opinion of the Company, sufficient to indemnify the Company in full against any liability the Company has for any amount of, or representing, income tax or any other tax arising from a Trigger Event (the “Shares Tax Liability”), or Purchaser has made such other arrangement as in the opinion of the Company will ensure that the full amount of any Shares Tax Liability will be recovered from Purchaser within such period as the Company may then determine.
11. Data Protection.
(a) To facilitate the administration of the Plan and this Agreement, it will be necessary for the Company (or its payroll administrators) to collect, hold and process certain personal information about Purchaser and to transfer this data to certain third parties such as brokers with whom Purchaser may elect to deposit any share capital under the Plan. Purchaser consents to the Company (or its payroll administrators) collecting, holding and processing Purchaser’s personal data and transferring this data to the Company or any other third parties insofar as is reasonably necessary to implement, administer and manage the Plan.
(b) Purchaser understands that Purchaser may, at any time, view Purchaser’s personal data, require any necessary corrections to it or withdraw the consents herein in writing by contacting the Company, but acknowledges that without the use of such data it may not be practicable for the Company to administer Purchaser’s involvement in the Plan in a timely fashion or at all and this may be detrimental to Purchaser.
12. Miscellaneous.
(a) Governing Law. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed by and construed in accordance with the Laws of the State of New York (including Section 5-1401 of the General Obligations Law of the State of New York but otherwise without regard to conflicts of Laws principles).
(b) Dispute Resolution and Arbitration. The Company and Purchaser shall attempt in good faith to resolve any dispute arising out of or relating to this Agreement promptly by negotiation. If the matter has not been resolved within thirty (30) calendar days of a party’s request for negotiation, either party may initiate proceedings or arbitration only as provided herein. If any dispute arising out of or relating to this Agreement or the breach, termination or validity thereof has not been resolved by negotiation, such dispute shall be settled by binding arbitration in accordance with the then current rules of JAMS by a single independent and impartial arbitrator who is located in Denver, Colorado. The arbitrator selected must have an expertise in the matter(s) in dispute. Each party shall bear his/her/its own fees and costs; the fees, costs and all administrative expenses of arbitration shall be borne equally by the Company and Purchaser. The parties understand and agree that the arbitration is subject to the rules of JAMS; that the arbitrator’s decision and award shall be final and binding as to all claims that were, or could have been, raised in arbitration; and that judgment upon the award rendered by the arbitrator may be entered in any court having competent jurisdiction. Any award rendered hereunder may include an award of attorneys’ fees and costs but shall not include punitive damages. The statute of limitations of the state of New York applicable to the commencement of a lawsuit shall apply to the commencement of an arbitration.
(c) Entire Agreement; Enforcement of Rights. This Agreement, the Option Agreement and the Plan set forth the entire agreement and understanding of the parties relating to the subject matter herein and merges all prior discussions between them. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing signed by the parties to this Agreement. The failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of any rights of such party.
(d) Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms.
(e) Construction. This Agreement is the result of negotiations between and has been reviewed by each of the parties hereto and their respective counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against any one of the parties hereto.
(f) Notices. Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, sent by reputable overnight courier service or mailed by first class mail, return receipt requested, to the recipient at the address in the Company’s personnel files and to the Company as indicated below:
Notices to the Company:
Sunshine Silver Mining & Refining Corporation
8400 E. Crescent Parkway, Suite 600
Greenwood Village, CO 80111
or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Agreement shall be deemed to have been given when so delivered, sent or mailed.
(g) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.
(h) Successors and Assigns. The rights and benefits of this Agreement shall inure to the benefit of, and be enforceable by the Company’s successors and assigns. The rights and obligations of Purchaser under this Agreement may only be assigned with the prior written consent of the Company.
[Signature Page Follows]
The parties have executed this Exercise Notice as of the date first set forth above.
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I, , spouse of , have read and hereby approve the foregoing Agreement. In consideration of the Company’s granting my spouse the right to purchase the Shares as set forth in the Agreement, I hereby agree to be irrevocably bound by the Agreement and further agree that any community property or other such interest shall hereby be similarly bound by the Agreement. I hereby appoint my spouse as my attorney-in-fact with respect to any amendment or exercise of any rights under the Agreement.
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Annex 1
QUESTIONNAIRE
The undersigned represents and warrants that it comes within each category marked below, and that for any category marked, it has truthfully set forth the factual basis or reason the undersigned comes within that category. The undersigned agrees to furnish any additional information which Sunshine Silver Mining & Refining Corporation (the “Company”) deems necessary in order to verify the answers set forth below.
o (a) The undersigned is an individual (not a partnership, corporation, etc.) whose individual net worth, or joint net worth with its spouse, presently exceeds $1,000,000.
Explanation. In calculating net worth you may include equity in personal property and real estate (other than your primary residence) cash, short-term investments, stock and securities. Equity in personal property and real estate should be based on the fair market value of such property less debt secured by such property. You must exclude from the calculation the value of your primary residence, and the related amount of indebtedness up to the fair market value of the residence may also be excluded. Indebtedness secured by the residence in excess of its fair market value must be deducted from your net worth.
o (b) The undersigned is an individual (not a partnership, corporation, etc.) who had an income in excess of $200,000 in each of the two most recent years, or joint income with their spouse in excess of $300,000 in each of those years (in each case including foreign income, tax exempt income and full amount of capital gains and loses but excluding any income of other family members and any unrealized capital appreciation) and has a reasonable expectation of reaching the same income level in the current year.
o (c) The undersigned is a director or executive officer of the Company, which is issuing the Shares.
o (d) The undersigned is not within any of the categories above and is therefore a nonaccredited investor.
THE UNDERSIGNED IS INFORMED OF THE SIGNIFICANCE TO THE COMPANY OF THE FOREGOING REPRESENTATIONS, AND THEY ARE MADE WITH THE INTENTION THAT THE COMPANY WILL RELY ON THEM.
IN WITNESS WHEREOF, the undersigned has executed the Questionnaire on , .
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SUNSHINE SILVER MINING & REFINING CORPORATION
Director Stock Unit (“DiSU”) Award Agreement
You have been granted a DiSU award (this “Award”) on the following terms and subject to the provisions of Attachment A and the Sunshine Silver Mining & Refining Corporation Long Term Incentive Plan (the “Plan”). Unless defined in this Award agreement (including Attachment A, this “Agreement”), capitalized terms will have the meanings assigned to them in the Plan. In the event of a conflict among the provisions of the Plan, this Agreement and any descriptive materials provided to you, the provisions of the Plan will prevail.
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Underlying Award |
[·] Shares (the “DiSU Shares”) |
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Vesting |
This Award is 100% vested as of the Grant Date. |
Attachment A
DiSU Award Agreement
Terms and Conditions
Grant to: [·]
Section 1. Grant of Award. Subject to the terms and conditions of the Plan and this Agreement, the Company hereby grants this Award to the Participant on the Grant Date on the terms set forth on the cover page of this Agreement, as more fully described in this Attachment A. This Award is granted under the Plan, which is incorporated herein by this reference and made a part of this Agreement.
Section 2. Timing of Vesting and Delivery.
(a) Vesting. This Award is 100% vested as of the Grant Date.
(b) Delivery of Shares. The Company shall deliver the DiSU Shares to the Participant on the date the Participant’s Continuous Service terminates for any reason; provided, however, that if a Change of Control occurs prior to such termination, the Company shall deliver the DiSU Shares to the Participant on the date of the Change of Control.
(c) Share Cash-Out. Upon delivery of the DiSU Shares pursuant to Section 2(b), if authorized by the Board, the Participant may elect to have withheld from the DiSU Shares that would otherwise be delivered to such Participant a number of DiSU Shares with an aggregate fair market value equal to such Participant’s tax liability as a result of such share delivery (the “Withheld DiSU Share Value”) and receive, in lieu of the withheld DiSU Shares, cash in the amount of the Withheld DiSU Share Value.
Section 3. Dividend Equivalents. If a dividend is paid on Shares during the period commencing on the Grant Date and ending on the date on which the DiSU Shares are delivered to the Participant, the Participant shall be eligible to receive an amount equal to the amount of the dividend that the Participant would have received had the DiSU Shares been delivered to the Participant as of the time at which such dividend is paid. Such amount shall be paid to the Participant on the date on which the DiSU Shares are delivered to the Participant in the same form (cash, Shares or other property) in which such dividend is paid to holders of Shares generally. Any Shares that the Participant is eligible to receive pursuant to this Section 3 are referred to herein as “Dividend Shares.”
Section 4. Additional Terms and Conditions.
(a) Withholding of Taxes. If the DiSU Shares are not publicly traded as of the DSU Share delivery date described in Section 2(b) above, then the
Committee may determine that the Company shall deduct applicable taxes from this Award and withhold, at the time of delivery of DiSU Shares, an appropriate number of shares of DiSU Shares for payment of required withholding taxes or to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for withholding of such taxes. Such DiSU Shares to be withheld shall be valued based on their fair market value when the tax withholding is required to be made.
(b) Issuance of Shares. Upon delivery of the DiSU Shares and, if applicable, any Dividend Shares, such Shares shall be evidenced by book-entry registration; provided, however, that the Committee may determine that such Shares shall be evidenced in such other manner as it deems appropriate, including the issuance of a stock certificate or certificates.
(c) Voting Rights. The Participant shall not have voting rights with respect to the DiSU Shares or, if applicable, any Dividend Shares unless and until such Shares are delivered to the Participant.
(d) Transferability. Unless and until the DiSU Shares and, if applicable, any Dividend Shares are delivered to the Participant, such Shares shall not be assigned, sold, transferred or otherwise be subject to alienation by the Participant, except as pursuant to Section 13 of the Plan.
Section 5. Miscellaneous Provisions.
(a) Notices. All notices, requests and other communications under this Agreement shall be in writing and shall be delivered in person (by courier or otherwise), mailed by certified or registered mail, return receipt requested, or sent by facsimile transmission, as follows:
if to the Company, to:
Sunshine Silver Mining & Refining Corporation
8400 E. Crescent Parkway, Suite 600
Greenwood Village, CO 80111
Attention: General Counsel
if to the Participant, to the address that the Participant most recently provided to the Company,
or to such other address or facsimile number as such party may hereafter specify for the purpose by notice to the other parties hereto. All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. on a business day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed received on the next succeeding business day in the place of receipt.
(b) Entire Agreement. This Agreement, the Plan, and any other agreements referred to herein and therein and any schedules, exhibits and other documents referred to herein or therein, constitute the entire agreement and understanding between the parties in respect of the subject matter hereof and supersede all prior and contemporaneous arrangements, agreements and understandings, both oral and written, whether in term sheets, presentations or otherwise, between the parties with respect to the subject matter hereof.
(c) Amendment; Waiver. No amendment or modification of any provision of this Agreement shall be effective unless signed in writing by or on behalf of the Company and the Participant, except that the Committee may amend or modify this Agreement without the Participant’s consent in accordance with the provisions of the Plan or as otherwise set forth in this Agreement. No waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any other or subsequent breach or condition whether of like or different nature. Any amendment or modification of or to any provision of this Agreement, or any waiver of any provision of this Agreement, shall be effective only in the specific instance and for the specific purpose for which made or given.
(d) Assignment. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by the Participant.
(e) Successors and Assigns; No Third Party Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the Company and the Participant and their respective heirs, successors, legal representatives and permitted assigns. Nothing in this Agreement, expressed or implied, is intended to confer on anyone other than the Company and the Participant, and their respective heirs, successors, legal representatives and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.
(f) Participant Undertaking. By accepting this Award, the Participant agrees to take whatever additional action and execute whatever additional documents the Company may deem necessary or advisable to carry out or give effect to any of the obligations or restrictions imposed on the Participant pursuant to the provisions of this Agreement.
(g) Plan. The Participant acknowledges and understands that material definitions and provisions concerning this Award and the Participant’s rights and obligations with respect thereto are set forth in the Plan. The Participant has read carefully, and understands, the provisions of the Plan.
(h) Governing Law. The Agreement shall be governed by the laws of the State of New York, without application of the conflicts of law principles thereof.
(j) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above.
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SUNSHINE SILVER MINING & REFINING CORPORATION
Deferred Stock Unit (“DSU”) Award Agreement
You have been granted a DSU award (this “Award”) on the following terms and subject to the provisions of Attachment A and the Sunshine Silver Mining & Refining Corporation Long Term Incentive Plan (the “Plan”). Unless defined in this Award agreement (including Attachment A, this “Agreement”), capitalized terms will have the meanings assigned to them in the Plan. In the event of a conflict among the provisions of the Plan, this Agreement and any descriptive materials provided to you, the provisions of the Plan will prevail.
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This Award is 100% vested as of the Grant Date. |
Attachment A
DSU Award Agreement
Terms and Conditions
Grant to: [·]
Section 1. Grant of Award. Subject to the terms and conditions of the Plan and this Agreement, the Company hereby grants this Award to the Participant on the Grant Date on the terms set forth on the cover page of this Agreement, as more fully described in this Attachment A. This Award is granted under the Plan, which is incorporated herein by this reference and made a part of this Agreement.
Section 2. Timing of Vesting and Delivery.
(a) Vesting. This Award is 100% vested as of the Grant Date.
(b) Delivery of Shares. The Company shall deliver the DSU Shares to the Participant on [·]; provided, however, that if the Participant’s Continuous Service is terminated for any reason or a Change of Control occurs, in each case prior to [·], the Company shall deliver the DSU Shares to the Participant on the date of termination or Change of Control (as applicable).
Section 3. Dividend Equivalents. If a dividend is paid on Shares during the period commencing on the Grant Date and ending on the date on which the DSU Shares are delivered to the Participant, the Participant shall be eligible to receive an amount equal to the amount of the dividend that the Participant would have received had the DSU Shares been delivered to the Participant as of the time at which such dividend is paid. Such amount shall be paid to the Participant on the date on which the DSU Shares are delivered to the Participant in the same form (cash, Shares or other property) in which such dividend is paid to holders of Shares generally. Any Shares that the Participant is eligible to receive pursuant to this Section 3 are referred to herein as “Dividend Shares.”
Section 4. Additional Terms and Conditions.
(a) Issuance of Shares. Upon delivery of the DSU Shares and, if applicable, any Dividend Shares, such Shares shall be evidenced by book-entry registration; provided, however, that the Committee may determine that such Shares shall be evidenced in such other manner as it deems appropriate, including the issuance of a stock certificate or certificates.
(b) Voting Rights. The Participant shall not have voting rights with respect to the DSU Shares or, if applicable, any Dividend Shares unless and until such Shares are delivered to the Participant.
(c) Transferability. Unless and until the DSU Shares and, if applicable, any Dividend Shares are delivered to the Participant, such Shares shall not be assigned, sold, transferred or otherwise be subject to alienation by the Participant.
Section 5. Miscellaneous Provisions.
(a) Notices. All notices, requests and other communications under this Agreement shall be in writing and shall be delivered in person (by courier or otherwise), mailed by certified or registered mail, return receipt requested, or sent by facsimile transmission, as follows:
if to the Company, to:
Sunshine Silver Mines Corporation
8400 E. Crescent Parkway, Suite 600
Greenwood Village, CO 80111
if to the Participant, to the address that the Participant most recently provided to the Company,
or to such other address or facsimile number as such party may hereafter specify for the purpose by notice to the other parties hereto. All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. on a business day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed received on the next succeeding business day in the place of receipt.
(b) Entire Agreement. This Agreement, the Plan, and any other agreements referred to herein and therein and any schedules, exhibits and other documents referred to herein or therein, constitute the entire agreement and understanding between the parties in respect of the subject matter hereof and supersede all prior and contemporaneous arrangements, agreements and understandings, both oral and written, whether in term sheets, presentations or otherwise, between the parties with respect to the subject matter hereof.
(c) Amendment; Waiver. No amendment or modification of any provision of this Agreement shall be effective unless signed in writing by or on behalf of the Company and the Participant, except that the Committee may amend or modify this Agreement without the Participant’s consent in accordance with the provisions of the Plan or as otherwise set forth in this Agreement. No waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any other or subsequent breach or condition whether of like or different nature. Any amendment or modification of or to any provision of this Agreement, or any
waiver of any provision of this Agreement, shall be effective only in the specific instance and for the specific purpose for which made or given.
(d) Assignment. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by the Participant.
(e) Successors and Assigns; No Third Party Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the Company and the Participant and their respective heirs, successors, legal representatives and permitted assigns. Nothing in this Agreement, expressed or implied, is intended to confer on anyone other than the Company and the Participant, and their respective heirs, successors, legal representatives and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.
(f) Participant Undertaking. By accepting this Award, the Participant agrees to take whatever additional action and execute whatever additional documents the Company may deem necessary or advisable to carry out or give effect to any of the obligations or restrictions imposed on the Participant pursuant to the provisions of this Agreement.
(g) Plan. The Participant acknowledges and understands that material definitions and provisions concerning this Award and the Participant’s rights and obligations with respect thereto are set forth in the Plan. The Participant has read carefully, and understands, the provisions of the Plan.
(h) Governing Law. The Agreement shall be governed by the laws of the State of New York, without application of the conflicts of law principles thereof.
(j) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above.
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SUNSHINE SILVER MINING & REFINING CORPORATION
ANNUAL INCENTIVE PLAN
Effective as of January 1, 2012
SECTION 1. Purpose. The purpose of the Sunshine Silver Mining & Refining Corporation Annual Incentive Plan (the “Plan”) is to incentivize executives and other employees of Sunshine Silver Mining & Refining Corporation and its subsidiaries and affiliates (collectively, the “Company”) to attain annual performance objectives, thereby furthering the best interests of the Company and its shareholders.
SECTION 2. Eligibility. Each employee of the Company (each, a “Participant”) shall be eligible to receive an annual cash bonus under the Plan for each fiscal year during which such Participant is employed with the Company. Each Participant who is employed for less than a full fiscal year shall be eligible for a pro rata bonus under the Plan for such year.
SECTION 3. Executive Officer Bonuses. For each fiscal year, objective criteria for determining the bonus payable to each Participant who is an executive officer of the Company shall be established by the Compensation and Nominating Committee of the Company’s Board of Directors (the “Committee”) based on such Participant’s base salary, a specified target bonus percentage, specified key performance indicators, individual performance goals, corporate performance objectives and/or any other objective criteria that the Committee deems appropriate including, without limitation, performance goals based on the performance measures enumerated in Section 7(E)(b) of the Sunshine Silver Mining & Refining Corporation Long Term Incentive Plan (the “LTIP”). The actual amount of the bonus payable to such Participant shall be approved by the Committee based on the attainment of the applicable objective criteria; provided that the Committee may decrease such amount based on such subjective criteria as the Committee deems appropriate including, without limitation, such Participant’s individual performance. For each fiscal year, the Committee shall identify the executive officers for purposes of this Section 3.
SECTION 4. Staff Bonuses. For each fiscal year, the Committee is authorized to approve a bonus pool for the Participants who are not executive officers of the Company for such year in an amount based on such employees’ base salaries, specified target bonus percentages, specified key performance indicators, individual performance goals, corporate performance objectives and/or any other objective criteria that the Committee deems appropriate including, without limitation, performance goals based on the performance measures enumerated in Section 7(E)(b) of the LTIP. The Company’s chief executive officer shall recommend for the Committee’s approval the actual amount of each such Participant’s bonus for such year, based on the attainment of the applicable objective criteria and any subjective criteria as the chief executive officer shall deem appropriate including, without limitation, such Participant’s individual performance; provided that the aggregate amount of such bonuses shall not exceed the amount of any bonus pool approved by the Committee for such year.
SECTION 5. General Provisions.
(a) Maximum Annual Bonus. In no event shall the annual cash bonus paid under the Plan to any individual Participant for a single fiscal year exceed $10 million.
(b) Restrictions on Transfer. The rights of a Participant with respect to any bonus under the Plan shall not be transferable other than by will or the laws of descent and distribution.
(c) Tax Withholding. Whenever a bonus under the Plan is to be paid to a Participant, the Company may withhold therefrom, or from any other amounts payable to or in respect of such Participant, an amount sufficient to satisfy any applicable tax withholding requirements related thereto.
(d) Unfunded Status of Bonuses. The Plan is intended to constitute an “unfunded” plan. With respect to any bonus not yet paid to a Participant, nothing contained in the Plan shall give such Participant any rights that are greater than those of a general creditor of the Company.
(e) Clawback. Notwithstanding any provision of this Plan to the contrary, any bonus paid under the Plan is subject to being called for repayment to the Company in accordance with the Company’s policy on the recoupment of incentive compensation, as in effect from time to time, and as required by any federal law or regulation that may govern executive compensation and apply to the Company.
(f) Amendment and Termination. The Committee may amend or terminate the Plan at any time.
SUNSHINE SILVER MINING & REFINING CORPORATION
NON-QUALIFIED DEFERRED COMPENSATION PLAN
FOR
SENIOR EXECUTIVES AND OUTSIDE DIRECTORS
Effective January 1, 2019
1. Establishment of Plan; Plan Name. Sunshine Silver Mining & Refining Corporation (the “Company”) hereby adopts and establishes the Sunshine Silver Mining & Refining Corporation Non-Qualified Deferred Compensation Plan for Senior Executives and Outside Directors (the “Plan”).
2. Effective Date; Plan Year. The Plan is effective January 1, 2019. The Plan Year shall be the calendar year.
3. Purpose of the Plan. The Plan’s purpose is to enable:
(a) senior executives (each an “Executive” and collectively, the “Executives”) to elect to defer receipt of any portion of cash (salary and/or bonus) compensation or equity compensation awards other than from the exercise of stock options, and
(b) non-employee directors of the Board of the Company (the “Board”) (each a “Non-Employee Director” and collectively, the “Non-Employee Directors”) to elect to defer receipt of any portion of annual Board retainers, Board meeting or Committee meeting compensation awards,
as such awards in (a) and (b) above may be issued from time to time under the Sunshine Silver Mining & Refining Corporation Long Term Incentive Plan or otherwise (“Deferral Compensation”).
4. Committee. “Committee” means the Board, or an appointed committee of the Board, when acting in connection with the administration of the Plan. The Committee shall have the sole discretion to administer and interpret the Plan (including ambiguous provisions thereof), determine benefits which are payable to Participants, and make all final decisions with respect to the rights of Participants hereunder.
5. Participant. “Participant” means a Non-Employee Director or Executive who is designated as eligible under the Plan by the Committee, and who elects to participate under the Plan by filing a Deferral Election with the Committee in accordance with Section 6.
6. Deferral Election Form. Prior to the December 31st immediately preceding each Plan Year, each Participant shall be entitled to file a form prescribed by the Committee so as to make an irrevocable election under the Plan (a “Deferral Election”) with respect to his or her eligible Deferral Compensation for such Plan Year.; provided that, with respect to the initial Plan Year beginning January 1, 2019, each Participant shall be entitled to file such a Deferral
Election prior to December 31, 2018 with respect to his or her eligible Deferral Compensation for such short Plan Year. Notwithstanding the preceding sentence, a Participant who first becomes eligible to participate during a Plan Year shall be entitled to make a Deferral Election within 30 days of his or her initial eligibility under the Plan, but only with regard to his or her Deferral Compensation paid for services performed for the Company after the date of such election. Pursuant to any such Deferral Election filed under this Section 6, a Participant may elect with respect to a Plan Year to defer a designated percentage of his or her eligible Deferral Compensation up to one hundred percent (100%). Any such Deferral Election shall also include, subject to Section 9, the form of distribution of any Deferral Compensation and may include an “evergreen” feature that permits the Participant’s Deferral Election to remain in effect for subsequent Plan Years until modified or revoked in accordance with uniform procedures established by the Committee. A Participant’s Deferral Election for a Plan Year shall be effective if, and only if, the Participant is in active service as an Executive or Non-Employee Director as of the first day of such Plan Year, as determined by the Committee in its sole discretion.
7. Participant Deferred Compensation Accounts. A bookkeeping account (a “Deferred Compensation Account”) shall be established by the Committee for each Participant making an election under the Plan. Each such Deferred Compensation Account shall be credited on the date(s) the Participant’s Deferral Compensation (e.g. the cash amount for elections to receive cash in the future and the number of shares of Company stock to be issued for elections to receive Company stock in the future based on the “Fair Market Value” as defined in Section 16 as the time of deferral) would otherwise have been paid, but for the Participant’s Deferral Election, and shall thereafter be credited with investment earnings (e.g., money market account rates for cash deferrals and dividends for Company stock deferrals) in the manner as specified by the Committee from time to time.
8. Events of Distribution of Participant’s Deferred Compensation Account. A Participant shall receive distribution, or commence to receive distribution, of his or her Participant’s Deferred Compensation Account, in accordance with the Participant’s Deferral Election, which shall be upon the earliest of:
(a) The date designated by the Participant in his or her Deferral Election;
(b) Subject to Section 11 below, the date of the Participant’s retirement from the Company or other termination of active service as a Non-Employee Director or Executive (as applicable); or
(c) The date of the Participant’s death.
9. Form of Distribution to Participant. A Participant shall be entitled to receive distribution of his or her Participant’s Deferred Compensation Account in any of the following forms as designated by the Participant in the Deferral Election filed pursuant to Section 6:
(a) a single lump distribution of cash or shares of Company stock; or
(b) annual installments of cash or shares of Company stock over a period of not more than five years after the date payment commences under Section 10; provided that, if the installment period selected by the Participant
would result in annual installments that include partial shares of Company stock, such partial shares shall not be distributed and, instead, such partial shares shall be aggregated and paid as a whole share coincident with the final installment.
10. Timing of Distributions. All distributions under the Plan shall be made or shall commence, as the case may be, on the earlier of the date designated by the Participant in his or her Deferral Election or the date that is six months and one day after the occurrence of any other applicable distribution event described in Section 8.
11. Distributions to a “Specified Employee.” In the event the Participant is considered a “Specified Employee,” payment of any benefits under this Plan shall not commence until six months following the Participant’s “Separation from Service.” The terms “Specified Employee” and “Separation from Service” shall have the definitions ascribed to them under Code Section 409A.
12. Beneficiary; Form of Distribution Upon Death of Participant. If a Participant shall cease to be a Non-Employee Director or Executive (as applicable) by reason of his or her death, or if he or she shall die after he or she shall be entitled to one or more distributions hereunder but prior to receipt of all distributions hereunder, the balance then remaining in the Participant’s Deferred Compensation Account shall be distributed as soon as administratively practicable (but in no event than the later of (i) the end of the calendar year during which the Participant dies or (ii) the 15th day of the third month following the Participant’s date of death) in a single lump distribution of cash or shares of Company stock, as applicable, to such beneficiary as such Participant shall designate by an instrument in writing filed with the Committee. In the absence of a valid beneficiary designation on file with the Committee as of the date of the Participant’s death, such single lump distribution shall be made to the Participant’s surviving spouse (and, if there is no such surviving spouse, to the Participant’s estate.)
13. Participant’s Rights Unsecured. The right of any Participant to receive a distribution of benefits hereunder shall be an unsecured claim against the general assets of the Company. The deferral compensation may not be assigned, transferred, encumbered, or otherwise disposed of by the Participant until the same shall be delivered to such Participant. The Company may contribute cash and/or issue shares of its common stock to be held in a grantor trust described in Section 14 below in anticipation of its obligation to make such distributions under the Plan, but no Participant shall have any rights in or against any such cash contributions or shares of common stock held in his or her Participant’s Deferred Compensation Account. All such benefits shall constitute general assets of the Company and may be disposed of by the Company at such time and for such purposes as it may deem appropriate.
14. Deposit of Funds into Grantor Trust. In its sole discretion, the Company may from time to time deposit with the trustee of a grantor trust established by the Company cash and/or shares of the common stock of the Company sufficient to carry out the terms of the Plan and which shall be distributed in accordance with the terms and conditions of the Plan. Any cash contributions or shares of the common stock of the Company deposited into such trust shall remain subject to the claims of the general creditors of the Company as if such funds were general assets of the Company.
15. Expenses. All costs of administration of the Plan will be paid by the Company.
16. Taxes. The Company or its designated third party administrator shall have the right to deduct applicable taxes from any distribution and withhold, at the time of delivery or vesting of cash or shares of common stock under this Plan, as applicable, an appropriate cash amount or number of shares of common stock (rounded up to the next whole share, as may be necessary) for payment of taxes based on the applicable tax withholding rates or other amounts required by law or to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for withholding of such taxes. Any such shares of Company stock shall be valued based on the Fair Market Value when the tax withholding is required to be made. The term “Fair Market Value” means, as of a particular date, the value of the common stock of the Company determined as follows: (i) if the common stock is traded in a public market, then the Fair Market Value per share shall be, (A) if the common stock is listed on a national securities exchange, the last reported sale price thereof on the relevant date (or if no shares of common stock were traded on such date, the next preceding date on which the common stock was traded), or (B) if the common stock is not so listed or included, the average of the last reported “bid” and “asked” prices thereof on the relevant date (or if no shares of common stock were traded on such date, the next preceding date on which the common stock was traded) as reported on the OTC Bulletin Board, or the Fair Market Value per share as determined by any other method adopted by the Committee from time to time as the Committee may deem appropriate or as may be required in order to comply with applicable laws and regulations; and (ii) at any time at which the Common Stock is not traded in a public market, then the Fair Market Value per share shall be determined by the Board, acting in good faith using a reasonable application of a reasonable method taking into consideration the provisions of the Treasury Regulations promulgated under Code Section 409A, and such determination shall be final and binding for all purposes of the Plan.
17. Forfeiture and Recoupment.
(a) General. A Participant’s rights, payments, and benefits, including any payment of cash or shares of common stock received under this Plan shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions, without limit as to time. Such events shall include, but shall not be limited to, failure to accept the terms of the Deferral Election, termination of service under certain or all circumstances, violation of material Company policies, misstatement of financial or other material information about the Company, fraud, misconduct, breach of noncompetition, confidentiality, non-solicitation, noninterference, corporate property protection, or other agreement that may apply to the Participant, or other conduct by the Participant that the Committee determines is detrimental to the business or reputation of the Company and its Subsidiaries, including facts and circumstances discovered after termination of employment.
(b) Section 302 Compliance. The Company shall require the chief executive officer and chief financial officer of the Company to disgorge bonuses, other incentive-or equity-based compensation, and profits on the sale of shares of common stock received within the 12-month period following the public release of financial information if there
is a restatement of such financial information because of material noncompliance, due to misconduct, with financial reporting requirements under the federal securities laws. In no event shall the amount to be recovered by the Company be less than the amount required to be repaid or recovered as a matter of law. The operation of this paragraph 17(b) shall be in accordance with the provisions of Section 302 of Sarbanes-Oxley Act and any applicable guidance.
(c) Section 954 Compliance. The Company shall require each current and former executive officer to disgorge bonuses, other incentive- or equity-based compensation received within 36-month period prior to the public release of the restatement of financial information due to material noncompliance with the financial reporting requirements under the federal securities laws. The amount to be recovered shall be the percentage of incentive compensation, including any benefits under this Plan, in excess of what would have been paid without the restated results. The operation of this section 17(c) shall be in accordance with the provisions of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and any applicable guidance.
(d) Manner of Recoupment. The Committee shall determine, as late as the time of the recoupment, regardless of whether such method is stated in the Deferral Election, whether the Company shall effect any such recoupment: (i) by seeking repayment from the Participant; (ii) by reducing (subject to applicable law and the terms and conditions of the applicable plan, program or arrangement) the amount that would otherwise be payable to the Participant under any compensatory plan, program or arrangement maintained by the Company or any of its affiliates; (iii) by withholding payment of future increases in compensation (including the payment of any discretionary bonus amount) or grants of compensatory benefits that would otherwise have been made to the Participant in accordance with the Company’s otherwise applicable compensation practices; (iv) by a holdback or escrow (before or after taxation) of part or all of the shares of common stock, payment or property received upon exercise or satisfaction of the benefit; or (v) by any combination of the foregoing.
18. Amendment, Modification, Suspension or Termination of the Plan. The Committee may amend, modify, suspend or terminate this Plan for the purpose of meeting or addressing any changes in legal requirements or for any other purpose permitted by law, except that (i) no amendment or alteration that would adversely affect the rights of any Participant under any benefit previously granted to such Participant shall be made without the consent of such Participant, provided, however, that no amendment that results in a change in the tax consequences of a benefit shall require the consent of the Participant; and (ii) no amendment or alteration shall be effective prior to its approval by the shareholders of the Company to the extent such approval is required by applicable legal or tax requirements or the requirements of the securities exchange on which the Company’s stock is listed. Notwithstanding the forgoing, the Committee may reform any provision in a benefit intended to be exempt from Code Section 409A to maintain to maximum extent practicable the original intent of the applicable provision without violating the provisions of Code Section 409A; provided, however, that if no reasonably practicable reformation would avoid the imposition of any penalty tax or interest under Code Section 409A, no benefit will be provided under the Plan and the benefit will be deemed null, void and of no force and effect, and the Company shall have no further obligation in connection
with such benefit. For purposes of Code Section 409A, the right to a series of installment payments under this Plan shall be treated as a right to a series of separate payments. The preceding provisions of this Section 18 shall not be construed as a guarantee by the Company or by any affiliate of any particular tax effect to the Participants under this Plan. The Company and its affiliates shall not be liable to the Participants for any additional tax, penalty or interest imposed under Code Section 409A.
19. Assignability. Unless otherwise determined by the Committee, no benefit under this Plan shall be assignable or otherwise transferable except by will, beneficiary designation or the laws of descent and distribution. In the event that a Participant’s valid beneficiary designation on file with the Committee conflicts with an assignment by will, the beneficiary designation will prevail. The Committee may prescribe other restrictions on transfer. Any attempted assignment of any benefit under this Plan in violation of this Section 19 shall be null and void.
20. Adjustments.
(a) No Restrictions on Company or Shareholders. The existence of outstanding benefit shall not affect in any manner the right or power of the Company or its shareholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the capital stock of the Company or its business or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stock (whether or not such issue is prior to, on a parity with or junior to the existing common stock) or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding of any kind, whether or not of a character similar to that of the acts or proceedings enumerated above.
(b) Subdivisions, Consolidations, Dividends and Splits. In the event of any subdivision or consolidation of outstanding shares of common stock, declaration of a dividend payable in shares of common stock or other stock split, then the number of shares of common stock covered by outstanding benefits shall be adjusted proportionately by the Committee as appropriate to reflect such transaction. In the event of any other recapitalization or capital reorganization of the Company, any consolidation or merger of the Company with another corporation or entity, the adoption by the Company of any plan of exchange affecting common stock or any distribution to holders of common stock of securities or property (other than normal cash dividends or dividends payable in common stock), the Committee shall make appropriate adjustments to the number of shares of common stock covered by outstanding benefits to reflect such transaction; provided that such adjustments shall only be such as are necessary to maintain the proportionate interest of the holders of the benefits and preserve, without increasing, the value of such benefits.
21. Restrictions. No common stock or other form of payment shall be issued with respect to any benefits unless the Company shall be satisfied based on the advice of its counsel that such issuance will be in compliance with applicable federal and state securities laws. Certificates evidencing shares of common stock delivered under this Plan (to the extent that such
shares are so evidenced) may be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any securities exchange or transaction reporting system upon which the common stock is then listed or to which it is admitted for quotation and any applicable federal or state securities law. The Committee may cause a legend or legends to be placed upon such certificates (if any) to make appropriate reference to such restrictions.
22. Unfunded Plan. This Plan shall be unfunded. Although bookkeeping accounts may be established with respect to Participants under this Plan, any such accounts shall be used merely as a bookkeeping convenience, including bookkeeping accounts established by a third party administrator retained by the Company to administer the Plan. The Company shall not be required to segregate any assets for purposes of this Plan or benefits hereunder, nor shall the Company, the Board or the Committee be deemed to be a trustee of any benefit to be granted under this Plan. Any liability or obligation of the Company to any Participant with respect to a benefit under this Plan shall be based solely upon any contractual obligations that may be created by this Plan, and no such liability or obligation of the Company shall be deemed to be secured by any pledge or other encumbrance on any property of the Company. Neither the Company nor the Board nor the Committee shall be required to give any security or bond for the performance of any obligation that may be created by this Plan.
23. Right to Employment or Other Service Relationship. Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Participant’s employment or other service relationship at any time, nor confer upon any Participant’s any right to continue in the capacity in which he or she is employed or otherwise serves the Company.
24. Successors. All obligations of the Company under the Plan with respect to benefits granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
25. Governing Law. This Plan and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by mandatory provisions of the Internal Revenue Code of 1986, as amended from time to time (the “Code”) or the securities laws of the United States, shall be governed by and construed in accordance with the Laws of the State of New York (including Section 5-1401 of the General Obligations Law of the State of New York but otherwise without regard to conflicts of Laws principles).
MANAGEMENT SERVICES AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT (this “Agreement”), effective as of [•], 2020 (the “Effective Date”), by and between Gatos Silver Inc., a Delaware corporation (the “Service Provider”) and Silver Opportunity Partners Corporation, a Delaware corporation (the “Company”). The Service Provider and the Company are sometimes referred to collectively as the “Parties” or individually as “Party.”
1. Term; Termination.
1.1. Term. This Agreement shall commence on the Effective Date and continue until terminated in accordance with Section 1.2 below.
1.2. Termination. The parties may terminate this Agreement by:
(a) mutual agreement in writing;
(b) upon sixty (60) days prior written notice by one Party to the other Party;
(c) upon the material default by one Party in the performance of any provision of this Agreement, and the defaulting Party’s failure to cure such default within thirty (30) days from its receipt of a notice of default from the non-defaulting Party; or
(d) upon the filing of a petition in bankruptcy court by a Party or upon the adjudication of bankruptcy on a Party, or upon the filing of a petition in bankruptcy against a Party and such petition is not discharged within sixty (60) days of such filing, or upon the insolvency of a Party.
1.3. Termination Effect.
(a) Immediately upon termination of this Agreement (the “Termination Date”), Service Provider shall immediately cease provision of the services listed on Exhibit A hereto (collectively and as may be updated from time to time by mutual agreement, the “Services”). All undisputed payments owed to Service Provider by the Company shall become immediately due and payable without further demand.
(b) Within fifteen (15) days after the termination of this Agreement, each Party shall return any item embodying any Confidential Information of the other Party.
2. Services.
2.1. Engagement. The Company hereby engages the Service Provider, and the Service Provider hereby accepts such engagement and agrees, upon the terms and subject to the conditions set forth herein, to provide or cause any of its affiliates to provide the Services to the Company.
2.2. Fiduciary; Authority. This Agreement shall permit the Service Provider to act in a fiduciary capacity with respect to the handling of funds and other assets of the Company,
subject to applicable law. The Service Provider shall have full authority to manage any and all aspects of the Company’s business and shall make, from time to time, and as reasonably requested by the Company, periodic status reports to the Company concerning operations, financial results, legal compliance and any other matter within the scope of the Service Provider’s broad range of duties, rights and obligations. If requested by the Service Provider, the Company will execute documentation confirming the Service Provider’s authority for use with third parties.
3. Management Fee; Service Provider Expenses.
3.1. Compensation. For the Services provided by Service Provider to the Company, the Company shall compensate Service Provider according to the terms set forth in Exhibit B, as amended by the Company and Service Provider from time to time, as deemed appropriate. It is both Parties’ understanding that the compensation may require to be updated annually in order to adapt it to the market circumstances and to meet the arm’s-length standard.
3.2. Payment Terms. All payment for the Services and any other charges under this Agreement shall be made in U.S. Dollars, free of any taxes and without any other deductions of any type, other than required by local law. Payment of compensation shall be made monthly using latest available information, with more accurate quarterly payments that correct for any estimation since the prior more accurate compensation determination.
3.3. Corrections. Adjustments or corrections to compensation calculations shall be paid within thirty (30) days of the month in which the adjustment or correction is determined and agreed by the Parties.
3.4. Taxes. All compensation under this Agreement is exclusive of taxes. Service Provider shall pay any federal, state, county, local or other governmental taxes, fees or duties now or hereinafter imposed on the Services hereunder, or any other transaction contemplated by this Agreement, as well as any penalties or interest thereon.
3.5. Disputed Invoices. If Company disputes any portion of an invoice, it will notify Service Provider in writing and if the Parties are not able to resolve the dispute within sixty (6o) days it shall be resolved in accordance with Section 8 below. Service Provider’s obligations to provide the Services shall not be affected by any payment disputes.
4. Standards of Performance. The Service Provider will use commercially reasonable efforts to perform the Services and in accordance with applicable rules, regulations, and laws. The Service Provider’s performance of the Services in accordance with the aforementioned standards is contingent upon the Company’s full and timely performance of the Company’s obligations under this Agreement.
5. Representations, Warranties, and Covenants of the Service Provider. The Service Provider represents, warrants, and covenants to the Company, with the understanding the Company is relying upon such representations, warranties, and covenants that:
5.1. Cooperation. The Service Provider will fully cooperate with the Company in all aspects of the provision of Services.
5.2. Authority. The Service Provider has the full right, power, and authority to enter into this Agreement and be bound by the terms of this Agreement without the consent of any other person or entity.
5.3. No Breach. The execution and delivery of this Agreement and the performance by the Company of its obligations pursuant to this Agreement do not and will not constitute a breach of or a default under any other agreement or obligation applicable to the Service Provider.
5.4. Binding Obligation. Upon execution and delivery of this Agreement, this Agreement will constitute the valid and binding obligation of the Service Provider.
6. Representations, Warranties, and Covenants of the Company. The Company represents, warrants, and covenants to the Service Provider, with the understanding the Service Provider is relying upon such representations, warranties, and covenants that the following is true and shall and must remain true for the duration of this Agreement:
6.1. Cooperation. The Company will fully cooperate with the Service Provider in all aspects of the provision of the Services, including, but not limited to, the completion of all tasks which need to be assigned to the Company by the Service Provider.
6.2. Authority. The Company has the full right, power, and authority to enter into this Agreement and be bound by the terms of this Agreement without the consent of any other person or entity.
6.3. No Breach. The execution and delivery of this Agreement and the performance by the Company of its obligations pursuant to this Agreement do not and will not constitute a breach of or a default under any other agreement or obligation applicable to the Company.
6.4. Binding Obligation. Upon execution and delivery of this Agreement, this Agreement will constitute the valid and binding obligation of the Company.
6.5. No Third-Party Beneficiary. The Company is the sole intended beneficiary of the Services and is entering into this Agreement on behalf of itself and not for the benefit of any other person or entity.
7. Confidential Information. Pursuant to this Agreement, the Parties hereto may be entrusted with Confidential Information belonging to the other Party. For purposes of this Agreement, “Confidential Information” shall mean all proprietary, confidential information concerning the Services and the business of each of the Parties hereto and that of their affiliates, parents and subsidiaries, including strategic and development plans, mineral resources and reserves information, financial condition, data, business records, project records, employee lists and business manuals, policies and procedures, information relating to processes or theory, business information on the costs and mechanics of the Services, which is not generally
available to the public. The Parties must: (a) maintain all Confidential Information of the other Party in a confidential manner; (b) not disclose any Confidential Information to any person or entity not authorized in writing by the other Party to receive or use such Confidential Information; and (c) not use, permit, or aid others in the use of any Confidential Information for any purpose other than the purposes contemplated by this Agreement. Any Confidential Information required to be disclosed by either Party pursuant to a valid order by a court or other governmental body having proper jurisdiction over the Company will not be disclosed by the Company until and unless the Company provides written notice to the other Party of such order sufficiently in advance of the disclosure to allow the other Party the reasonable opportunity to defend against such disclosure.
8. Dispute Resolution.
8.1. 8.1 Mediation. Any dispute, controversy, or claim arising out of or relating to this Agreement (a “Dispute”) that cannot be settled through negotiation shall be mediated by the parties before a single mediator in the State of New York. Any Party to this Agreement may invoke the right to mediation set forth in this Section 8.1 by sending written notice to the other Party or parties of such invocation and setting forth in adequate detail the nature of the matter to be mediated. The parties to the mediation jointly shall appoint the mediator within fifteen (15) calendar days of receipt of the written notice. The mediation proceedings shall commence and be diligently pursued by the parties to this Agreement within 15 calendar days of the appointment of the mediator. Each party to the mediation shall bear its own costs and expenses incurred with respect to the mediation. The cost of the mediator and the mediation procedure shall be borne equally by the parties to the mediation.
8.2. Arbitration. Any Dispute that cannot be settled or resolved by negotiation or through mediation to the satisfaction of all parties to the mediation within 90 days of the notice of the invocation of mediation pursuant to Section 8.1 above shall be resolved through binding arbitration. Any Party may invoke the right to arbitration set forth in this Section 8.2 by sending written notice to the other Party or parties of such invocation. The parties shall name a single arbitrator within 20 calendar days after such written notice. The arbitrator shall render a decision within 60 calendar days after his or her appointment and shall conduct all proceedings pursuant to the then existing rules of the American Arbitration Association (the “AAA”) governing commercial transactions, to the extent such rules are not inconsistent with Delaware law and this Agreement. Judgment upon the award rendered pursuant to the arbitration may be entered in any court having jurisdiction. The cost of the arbitration procedure shall be borne by the losing party or, if the decision is not clearly in favor of one party or the other, then such costs shall be borne as determined by the arbitrator. The arbitration procedure provided for in this Agreement shall be binding arbitration and shall be the sole and exclusive remedy for any applicable Dispute. This Section 8.2 does not prohibit or limit any Party’s right to seek relief in court as permitted in accord with the AAA’s Commercial Arbitration Rules.
9. 9. Miscellaneous.
9.1. 9.1 Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of New York without regard to the principles of conflicts of laws thereof.
9.2. Entire Agreement. This Agreement constitutes the entire Agreement between the parties pertaining to the subject matter contained in this. Agreement. All prior and/or contemporaneous agreements, representations, and understandings of the parties, oral or written, pertaining to the subject matter contained in this Agreement are superseded by and merged in this Agreement. No supplement, modification, or amendment of this Agreement will be binding unless in writing and executed by the parties. All recitals are incorporated in this Agreement by reference and made an integral part hereof.
9.3. Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient; or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the addresses indicated below (or at such other address for a Party as shall be specified in a notice given in accordance with this Section).
If to the Company:
Silver Opportunity Partners Corporation
1660 Lincoln Street
Suite 2750
Denver, CO 80264
Attention: [•]
If to the Service Provider:
Gatos Silver, Inc.
8400 E. Crescent Pkwy
Suite 600
Greenwood Village, CO 80111
Attention: Roger Johnson
Adam Dubas
9.4. Entire Agreement. This Agreement constitutes the sole and entire agreement of the Parties to this Agreement with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter.
9.5. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and their respective successors and permitted assigns. Neither Party may assign its rights or obligations hereunder without the prior written
consent of the other Party, which consent shall not be unreasonably withheld or delayed. No assignment shall relieve the assigning Party of any of its obligations hereunder.
9.6. Amendment and Modification. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each Party hereto.
9.7. No Third-Party Beneficiaries. This Agreement is for the sole benefit of the Parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
9.8. Further Assurances. Each of the Parties hereto shall, and shall cause their respective Affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement.
9.9. Headings. The headings of this Agreement are for purposes of reference only and will not limit or define the meaning of any provision of this Agreement.
9.10. Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify the Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be effectuated as originally contemplated to the greatest extent possible.
9.11. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
[Signature pages follow]
IN WITNESS WHEREOF, the Parties have executed this Agreement to be effective as of the Effective Date.
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COMPANY |
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Silver Opportunity Partners Corporation |
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SERVICE PROVIDER |
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Gatos Silver, Inc. |
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EXHIBIT A
DESCRIPTION OF SERVICES
The descriptions below describe the type of services that are being performed and charged by Service Provider. As part of this Agreement, there may be additional services performed that benefit Company that will be charged using the same methodologies as described in Exhibit B.
Services — All areas of management / operational services related to the day to day management of the Company’s business, including (but not limited to) the following:
· Executive Services — Includes strategic management and other activities undertaken to oversee the day-to-day operations of the Company.
· Other Services — Includes corporate / back-office services such as IT coordination, accounting and planning software access, accounting, human resources, finance, coordination with service providers, preparation of financial statements, and negotiations with insurance providers, etc.
· IT Services — Includes information technology activities such access to, maintenance, and repair of Company network systems and periodic systems updates coordination.
EXHIBIT B
COMPENSATION
The Company shall pay an amount of compensation to the Service Provider for the provision of the Services in an amount equal to the Service Provider’s direct and indirect bona fide costs incurred to provide such Services plus a 10% markup.
SHAREHOLDERS AGREEMENT
by and among
GATOS SILVER, INC.
and
THE STOCKHOLDERS THAT ARE SIGNATORIES HERETO
Dated as of [·], 2020
TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS |
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Section 1.01. |
Definitions |
1 |
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Section 1.02. |
Other Interpretive Provisions. |
4 |
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ARTICLE 2 |
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REPRESENTATIONS AND WARRANTIES |
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Section 2.01. |
Existence; Authority; Enforceability |
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Section 2.02. |
Absence of Conflicts |
5 |
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Section 2.03. |
Consents |
5 |
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ARTICLE 3 |
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GOVERNANCE |
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Section 3.01. |
Board of Directors. |
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Section 3.02. |
Actions that Require Electrum Approval |
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Section 3.03. |
Information; Duties. |
8 |
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ARTICLE 4 |
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TRANSFERS OF SHARES |
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Section 4.01. |
Rights and Obligations of Affiliate Stockholders. |
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ARTICLE 5 |
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GENERAL PROVISIONS |
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Section 5.01. |
Further Assurances |
8 |
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Section 5.02. |
Assignment; Benefit |
9 |
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Section 5.03. |
Freedom to Pursue Opportunities |
9 |
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Section 5.04. |
Termination |
10 |
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Section 5.05. |
Subsequent Acquisition of Shares; Other Activities |
10 |
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Section 5.06. |
Severability |
10 |
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Section 5.07. |
Entire Agreement |
10 |
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Section 5.08. |
Amendment |
10 |
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Section 5.09. |
Waiver |
10 |
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Section 5.10. |
Counterparts |
11 |
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Section 5.11. |
Notices |
11 |
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Section 5.12. |
Governing Law |
12 |
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Section 5.13. |
Jurisdiction |
12 |
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Section 5.14. |
Waiver of Jury Trial |
12 |
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Section 5.15. |
Specific Performance |
12 |
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Section 5.16. |
Marketing Materials |
12 |
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Section 5.17. |
Adjustments |
12 |
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Section 5.18. |
No Third Party Beneficiaries |
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Section 5.19. |
Indemnification |
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SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (as it may be amended from time to time in accordance with the terms hereof, this “Agreement”), dated as of [·], 2020, is made by and among Gatos Silver, Inc., a Delaware corporation (the “Company”), and the stockholders that are or become signatories hereto (each a “Stockholder” and collectively, the “Stockholders”).
RECITALS
WHEREAS, as of the date of this Agreement, the Stockholders beneficially own greater than a majority of the outstanding Company Shares (as defined below);
WHEREAS, the Company is proposing to sell Company Shares to the public in an initial public offering (the “IPO”); and
WHEREAS, subject to the terms and conditions herein, the Stockholders and the Company desire to enter into this Agreement to provide for certain rights and obligations of the Stockholders and the Company.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises, covenants and agreements of the Parties, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.01. Definitions. As used in this Agreement, the following terms shall have the following meanings:
“Affected Stockholder” has the meaning set forth in Section 5.08.
“Affiliate” means (a) with respect to any Electrum Party, any Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person, (b) with respect to the MERS Party, any Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person and (c) with respect to any other Person, any Person directly or indirectly controlling or controlled by or under direct or indirect common control with such Person. It being understood and agreed that, for purposes hereof, (i) each Electrum Party shall be deemed to be an Affiliate of every other Electrum Party and each MERS Party shall be deemed to be an Affiliate of every other MERS Party, (ii) neither the Company nor any subsidiary of the Company shall be deemed to be an Affiliate of any Stockholder, and, (iii) except as set forth in clause (i) above, no Stockholder shall be deemed to be an Affiliate of any other Stockholder.
“Agreement” has the meaning set forth in the preamble.
“Board of Directors” means the board of directors of the Company.
“Business Day” means any day other than a Saturday, Sunday or day on which banking institutions in New York, New York are authorized or obligated by law or executive order to close.
“Change of Control” mean any transaction or series of related transactions (whether by merger, consolidation or sale or transfer of the Company Shares or assets (including stock of its subsidiaries), or otherwise) as a result of which a Person or group (within the meaning of Section 13(d)(3) of the U.S. Securities Exchange Act of 1934) that is not one of the Sponsors (or any Affiliate of such Sponsor, or any officer, director, or employee of such Sponsor or its Affiliates) obtains beneficial ownership, directly or indirectly, (i) of Company Shares which represent more than 50% of the total voting power of the Company or (ii) by lease, license, sale or otherwise, of all or substantially all of the assets of the Company and its subsidiaries on a consolidated basis.
“Company” has the meaning set forth in the preamble.
“Company Shares” means common stock of the Company, par value $0.001 per share, and any and all securities of any kind whatsoever of the Company that may be issued by the Company after the date hereof in respect of, in exchange for, or in substitution of, Company Shares, pursuant to any stock dividends, splits, reverse splits, combinations, reclassifications, recapitalizations, reorganizations and the like occurring after the date hereof.
“Cure Period” has the meaning set forth in Section 3.01(e).
“Defaulting Stockholder” has the meaning set forth in Section 3.01(e).
“Directed Opportunity” has the meaning set forth in Section 5.03(a).
“Director” means a member of the Board of Directors.
“Electrum Designee” means The Electrum Group LLC or its successors or assigns who is an Electrum Party or is an assignee of Electrum pursuant to Section 5.02.
“Electrum Parties” means, collectively, Electrum Silver US LLC, Electrum Silver US II LLC, Tigris Financial Group Ltd., GRAT Holdings LLC and Manul Capital Management LLC and any Affiliates of the foregoing to whom Company Shares are Transferred by a Stockholder after the IPO Date in accordance with this Agreement.
“Governing Documents” means the amended and restated certificate of incorporation of the Company, as amended or modified from time to time, and the amended and restated bylaws of the Company, as amended or modified from time to time.
“Indemnified Liabilities” has the meaning set forth in Section 5.19.
“Indemnified Parties” has the meaning set forth in Section 5.19.
“independent director” means a Director who qualifies, as of the date of such Director’s election or appointment to the Board of Directors and as of any other date on which the determination is being made, as an “independent director” pursuant to SEC rules and applicable listing standards, as amended from time to time, as determined by the Board of Directors.
“IPO” has the meaning set forth in the recitals.
“IPO Date” means the date on which the IPO is consummated.
“MERS Party” means the Municipal Employees’ Retirement System of Michigan and any Affiliates of the foregoing to whom Company Shares are Transferred by a Stockholder after the IPO Date in accordance with this Agreement.
“Necessary Action” means, with respect to a specified result, all actions (to the extent such actions are permitted by law and by the Governing Documents) necessary to cause such result, including (i) voting or providing a written consent or proxy with respect to the Company Shares, (ii) causing the adoption of stockholders’ resolutions and amendments to the Governing Documents, (iii) causing Directors (to the extent such Directors were nominated or designated by the Person obligated to undertake the Necessary Action, and subject to any fiduciary duties that such Directors may have as Directors) to act in a certain manner or causing them to be removed in the event they do not act in such a manner, (iv) executing agreements and instruments, and (v) making, or causing to be made, with governmental, administrative or regulatory authorities, all filings, registrations or similar actions that are required to achieve such result.
“Party” means the Company and the Stockholders party to this Agreement, including any Permitted Transferee who becomes a Party pursuant to Section 4.03(a).
“Permitted Transferee” means in the case of any Stockholder, an Affiliate of such Stockholder.
“Person” means an individual, partnership, limited liability company, corporation, trust, other entity, association, estate, unincorporated organization or a government or any agency or political subdivision thereof.
“Proxy Holder” has the meaning set forth in Section 3.01(e).
“Registration Rights Agreement” means that certain Registration Rights Agreement, dated as of the date of this Agreement, by and among the Company, the Stockholders and the other parties that are signatories thereto, as such agreement may be amended from time to time in accordance therewith.
“Registration Statement” means any registration statement of the Company filed with, or to be filed with, the SEC under the Securities Act, including any related prospectus, amendments and supplement to such registration statement, including post-effective amendments, and all exhibits and all material incorporated by reference in such registration statement other than a registration statement (and related prospectus) filed on Form S-8 or any successor form thereto.
“SEC” means the Securities and Exchange Commission.
“Securities Act” means the United States Securities Act of 1933, as amended, and any successor thereto, and any rules and regulations promulgated thereunder, all as the same shall be in effect from time to time.
“Specified Party” has the meaning set forth in Section 5.03(a).
“Sponsor Director” means any Director designated by a Sponsor pursuant to the terms of this Agreement.
“Sponsors” means Electrum Silver US LLC and the MERS Party.
“Stockholder” and “Stockholders” have the meaning set forth in the preamble.
“Stockholder Majority” means the consent or approval of the Stockholders (including, if applicable, the Stockholder(s) requesting a consent or approval) then owning a majority of the Company Shares then owned by all of the Stockholders.
“Transfer” means (a) a direct or indirect transfer, sale, exchange, assignment, pledge, hypothecation or other encumbrance or other disposition of Company Shares, or any legal or beneficial interest therein, including the grant of an option or other right or the grant of any interest that would result in a Stockholder no longer having the power to vote, or cause to be voted, such Stockholder’s Company Shares, whether directly or indirectly, whether voluntarily, involuntarily or by operation of law or (b) any agreement to take or commit to any of the foregoing actions; and “Transferred,” “Transferee,” “Transferor,” and “Transferability” shall each have a correlative meaning. For the avoidance of doubt, a transfer, sale, exchange, assignment, pledge, hypothecation or other encumbrance or other disposition of an interest in any Stockholder, or direct or indirect parent thereof, all or substantially all of whose assets are, directly or indirectly, Company Shares shall constitute a “Transfer” of Company Shares for purposes of this Agreement. For the avoidance of doubt, a transfer, sale, exchange, assignment, pledge, hypothecation or other encumbrance or other disposition of an interest in any Stockholder, or direct or indirect parent thereof, which has substantial assets in addition to Company Shares shall not constitute a “Transfer” of Company Shares for purposes of this Agreement.
Section 1.02. Other Interpretive Provisions.
(a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.
(b) The words “hereof,” “herein,” “hereunder” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement; and any subsection and Section references are to this Agreement unless otherwise specified.
(c) The term “including” is not limiting and means “including without limitation.”
(d) The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement.
(e) Whenever the context requires, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
Each of the Parties hereby represents and warrants, solely with respect to itself, to each other Party that:
Section 2.01. Existence; Authority; Enforceability. Such Party has the power and authority to enter into this Agreement and to carry out its obligations hereunder. Such Party is duly organized and validly existing under the laws of its jurisdiction of organization, and the execution of this Agreement, and the performance of its obligations hereunder, have been authorized by all necessary action, and no other act or proceeding on its part is necessary to authorize the execution of this Agreement or the performance of its obligations hereunder. This Agreement has been duly executed by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally.
Section 2.02. Absence of Conflicts. The execution and delivery by such Party of this Agreement and the performance of its obligations hereunder does not (a) conflict with, or result in the breach of any provision of the constitutive documents of such Party; (b) result in any violation, breach, conflict, default or event of default (or an event which with notice, lapse of time, or both, would constitute a default or event of default), or give rise to any right of acceleration or termination or any additional payment obligation, under the terms of any contract, agreement or permit to which such Party is a party or by which such Party’s assets or operations are bound or affected; or (c) violate any law applicable to such Party, except, in the case of clause (b), as would not have a material adverse effect on such Party’s ability to perform its obligations hereunder.
Section 2.03. Consents. Other than as has already been obtained, no consent, waiver, approval, authorization, exemption, registration, license or declaration is required to be made or obtained by such Party in connection with the execution, delivery or performance of this Agreement, except in each case, as would not have a material adverse effect on such Party’s ability to perform its obligations hereunder.
ARTICLE 3
GOVERNANCE
Section 3.01. Board of Directors.
(a) From and after the date of this Agreement, the Electrum Parties, acting through the Electrum Designee, shall have the right, but not the obligation, to nominate (a) a number of designees to the Board of Directors that is one fewer than a majority of the Board of Directors following all nominations pursuant to this Section 3.01 so long as the Electrum Parties beneficially own in the aggregate a number of Company Shares equal to at least 35% of the then outstanding Company Shares and (b) one designee to the Board of Directors so long as the Electrum Parties beneficially own in the aggregate a number of Company Shares equal to (x) less than 35% of the then outstanding Company Shares and (y) at least 5% of the then outstanding Company Shares. If the Electrum Parties beneficially own in the aggregate a number of Company Shares equal to less than 5% of the then outstanding Company Shares, the Electrum Parties shall not have the right pursuant to this Section 3.01(a) to nominate any designees to be elected to the Board of Directors. In the event that the Electrum Parties have not nominated the designees that the Electrum Parties are entitled to nominate pursuant to this Section 3.01(a), the Electrum Parties, acting through the Electrum Designee, shall have the right, at any time, to nominate such additional designees to which they are entitled, in which case, the Stockholders shall take, or cause to be taken, all Necessary Action to (A) increase the size of the Board of Directors as required to enable the Electrum Parties to so nominate such additional designees and (B) appoint such additional designees nominated by the Electrum Parties to such newly created directorships.
(b) From and after the date of this Agreement, the MERS Party shall have the right, but not the obligation, to nominate one designee to the Board of Directors so long as the MERS Party beneficially owns in the aggregate a number of Company Shares equal to at least 5% of the then outstanding Company Shares. If the MERS Party beneficially owns in the aggregate a number of Company Shares equal to less than 5% of the then outstanding Company Shares, the MERS Party shall not have the right pursuant to this Section 3.01(b) to nominate any designees to be elected to the Board of Directors. In the event that the MERS Party has not nominated the designee that the MERS Party is entitled to nominate pursuant to this Section 3.01(b), the MERS Party shall have the right, at any time, to nominate such designee, in which case, the Stockholders shall take, or cause to be taken, all Necessary Action to (A) increase the size of the Board of Directors as required to enable the MERS Party to so nominate such designee and (B) appoint such designee nominated by the MERS Party to such newly created directorship.
(c) Each of the Stockholders shall take all Necessary Action to cause the Board of Directors to be constituted as set forth in this Section 3.01 (including appointing or removing Sponsor designees and filling any vacancies created by reason of death, disability, retirement, removal or resignation of a Sponsor’s designees with a new designee of such Sponsor) and shall vote all of such Stockholder’s Company Shares in favor of the election of the persons designated pursuant to this Section 3.01 to the Board of Directors. The Company agrees to use its best efforts to include in the slate of nominees recommended by the Board of Directors those persons designated pursuant to this Section 3.01 and to use its best efforts to cause the election or appointment of each such designee to the Board of Directors, including nominating such designees to be elected as Directors.
(d) The Company shall reimburse the Sponsor Directors for all reasonable out-of-pocket expenses incurred in connection with their attendance at meetings of the Board of Directors and any committees thereof.
(e) Solely for purposes of this Section 3.01, and in order to secure the performance of each Stockholder’s obligations under this Section 3.01, each Stockholder hereby irrevocably appoints each other Stockholder that qualifies as a Proxy Holder (as defined below) the attorney-in-fact and proxy of such Stockholder (with full power of substitution) to vote or provide a written consent with respect to its Company Shares as described in this paragraph if, and only in the event that, such Stockholder fails to vote or provide a written consent with respect to its Company Shares in accordance with the terms of this Section 3.01 (each such Stockholder, a “Defaulting Stockholder”). Each Defaulting Stockholder shall have five Business Days from the date of a request for such vote or written consent (the “Cure Period”) to cure such failure. If after the Cure Period the Defaulting Stockholder has not cured such failure, any Stockholder whose designees to the Board of Directors were required to be approved or removed by the Defaulting Stockholder pursuant to this Section 3.01 but were not approved or removed by the Defaulting Stockholder, shall have, and is hereby irrevocably granted, a proxy to vote or provide a written consent with respect to each such Defaulting Stockholder’s Company Shares for the purposes of taking the actions required by this Section 3.01 (such Stockholder, a “Proxy Holder”), and of removing from office any Directors elected to the Board of Directors in lieu of the designees of the Proxy Holder who should have been elected pursuant to this Section 3.01. Each Stockholder intends this proxy to be, and it shall be, irrevocable and coupled with an interest, and each Stockholder will take such further action and execute such other instruments as may be necessary to effectuate the intent of this proxy and hereby revokes any proxy previously granted by it with respect to the matters set forth in this Section 3.01 with respect to the Company Shares owned by such Stockholder. Notwithstanding the foregoing, the power of attorney and proxy granted by this Section 3.01 shall be deemed to be revoked upon the termination of this Agreement in accordance with its terms.
(f) To the extent that the number of Directors that the Electrum Parties or the MERS Party are entitled to designate pursuant to this Section 3.01 is reduced, the Electrum Parties or the MERS Party, as the case may be, shall cause the required number of Directors to promptly resign from the Board of Directors and any vacancies resulting from such resignation shall be filled by the Board of Directors in accordance with the Governing Documents and SEC rules and applicable listing standards then in effect.
Section 3.02. Actions that Require Electrum Approval. In addition to any other approval required by the Governing Documents or by applicable Law, and until such time as the Electrum Parties no longer own at least 35% of the then outstanding Company Shares, approval of the Electrum Designee shall be required for the Company or any of its subsidiaries to take any of the following actions, and the Company and its subsidiaries shall not take any of the following actions without approval of the Electrum Designee:
(a) Change of Control. Enter into or effect a Change of Control.
(b) Certain Dispositions. Directly or indirectly, enter into or effect any transaction or series of related transactions, involving the sale, lease, license, exchange or other disposal (including by merger, amalgamation, consolidation, sale of stock or sale of assets) by the Company or any of its direct or indirect subsidiaries of any assets (including equity interests in any Person and any licenses) having a fair market value or for consideration having a fair market value (in each case as reasonably determined by the Board of Directors) in excess of $100,000,000, other than transactions solely between and among the Company and its wholly owned subsidiaries.
(c) Certain Acquisitions and Joint Ventures. Enter into or effect (i) any transaction or series of related transactions involving the purchase, rent, lease, license, exchange or other acquisition (whether by merger, consolidation, acquisition of stock or acquisition of assets) by the Company or any of its direct or indirect subsidiaries of any assets and equity securities of any Person for consideration or (ii) any joint venture or similar business alliance involving investment, contribution or disposition by the Company or any of its direct or indirect subsidiaries of assets (including stock of subsidiaries), in the case of each of (i) and (ii), having a fair market value (as reasonably determined by the Board of Directors) in excess of $100,000,000, other than transactions solely between and among the Company and its wholly owned subsidiaries.
(d) Certain Indebtedness. Other than borrowings under any debt agreement which previously received the approval of the Electrum Designee, authorize or permit the Company or any of its direct or indirect subsidiaries to (i) incur (or extend, supplement or otherwise modify any of the material terms of) any indebtedness (other than intercompany indebtedness among the Company or any of its direct or indirect subsidiaries), assume, guarantee, endorse or otherwise as an accommodation become responsible for the indebtedness of any other Person (provided that the Company or any of its direct or indirect subsidiaries may provide cross-guarantees for any indebtedness that has been approved under this Section 3.02(d)), issue any debt securities, enter into any agreement under which it may incur indebtedness or issue debt securities in the future, in an aggregate amount in excess of $100,000,000 for all such matters or (ii) make any loan, advance or capital contribution to any Person (other than the Company or any of its direct or indirect subsidiaries), in each case outstanding at any time, in an aggregate amount in excess of $100,000,000 for all such matters.
(e) Equity Issuances. Authorize, create or issue any equity securities of the Company or any of its direct or indirect subsidiaries (except as may be issued to the Company or any of its wholly owned subsidiaries), issue any options or rights to acquire any equity securities of the Company or any of its direct or indirect subsidiaries or grant any registration rights in respect of any such securities, options or rights, except for (i) equity securities, options or rights to acquire equity securities and piggyback registration rights issued or granted pursuant to management and employee incentive plans approved by the Board of Directors or (ii) other issuances (other than to current or former employees, consultants or directors) of equity securities or options or rights to acquire equity securities with a value (as reasonably determined by the Board of Directors) not in excess of $100,000,000 in the aggregate.
(f) Dissolution; Liquidation; Reorganization; Bankruptcy. Dissolve, liquidate or engage in any recapitalization or reorganization of the Company or any subsidiary (which such subsidiary individually or in the aggregate is material to the Company) or initiate a voluntary liquidation, dissolution, receivership, bankruptcy or other insolvency proceeding involving the Company or any direct or indirect subsidiary (which such subsidiary individually or in the aggregate is material to the Company).
Section 3.03. Actions Requiring Consultation with Electrum. In addition to any other approval required by the Governing Documents or by applicable Law, and until such time as the Electrum Parties no longer own at least 35% of the then outstanding Company Shares, the Company, its officers or the Board of Directors, as the case may be, must consult with the Electrum Designee for the Company or
any of its subsidiaries to take any of the following actions, and the Company and its subsidiaries shall not take any of the following actions without prior consultation with the Electrum Designee and providing the opportunity for the Electrum Designee to comment; provided that the Company, its officers or the Board of Directors, as the case may be shall consider any comments provided but shall not be required to accept any such comments:
(a) Key Officers. Hire or remove, with or without cause, or enter into, renew, retain, materially modify (including a change in responsibilities) or terminate any employment contract with the executive chairman, chief executive officer, chief financial officer or chief operating officer of the Company from time to time.
(b) Annual Capital Expenditure Budget. Approve the capital expenditure budget for any fiscal year of the Company.
Section 3.04. Information; Duties.
(a) The Company and the Stockholders agree that the Directors designated by the Electrum Parties and the MERS Party may share confidential, non-public information about the Company with the Electrum Parties, the MERS Party and their respective Affiliates, provided that such Parties agree to keep such information confidential (except as may be required by law or applicable listing standards then in effect) and agree to comply with all applicable securities laws in connection therewith.
(b) The Company and the Stockholders agree that, notwithstanding anything to the contrary in any other agreement or at law or in equity, when any of the Stockholders (in their capacity as Stockholders) takes any action under this Agreement to give or withhold its consent, such Person shall, to the fullest extent permitted by law, have no duty to consider the interests of the Company or the other Stockholders or any other stockholders of the Company and may act exclusively in its and its Affiliates’ own interests; provided, however, that the foregoing shall in no way affect the obligations of the Parties to comply with the provisions of this Agreement.
ARTICLE 4
TRANSFERS OF SHARES
Section 4.01. Rights and Obligations of Affiliate Stockholders. Any Transfer of Company Shares to any Affiliate of a Stockholder shall be permitted hereunder only if such Affiliate agrees in writing that it shall, upon such Transfer, assume with respect to such Company Shares the Transferor’s obligations under this Agreement and become a Party for such purpose and be treated as a Stockholder for all purposes of this Agreement, and become a party to any other applicable agreement or instrument executed and delivered by such Transferor in respect of the Company Shares.
ARTICLE 5
GENERAL PROVISIONS
Section 5.01. Further Assurances. The Parties shall take all Necessary Action in order to give full effect to this Agreement and every provision hereof. Each of the Company and the Stockholders shall take or cause to be taken all lawful action necessary to ensure at all times that the Company’s Governing Documents are not at any time inconsistent with the provisions of this Agreement. In addition, each Party shall do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments, and documents as any other Party reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement.
Section 5.02. Assignment; Benefit. The rights and obligations hereunder shall not be assigned without the prior written consent of the Company and the Stockholder Majority, except in connection with a Transfer of Company Shares to an Affiliate in compliance with Article 4 or in connection with the Transfer of all Company Shares held by the Electrum Parties or the MERS Party to a third party. Any assignment of rights or obligations in violation of this Section 5.02 shall be null and void. This Agreement shall be binding upon and shall inure to the benefit of the Parties, and their respective successors and permitted assigns.
Section 5.03. Freedom to Pursue Opportunities.
(a) To the fullest extent permitted by applicable law, the Company, on behalf of itself and its subsidiaries, renounces any interest, duty or expectancy of the Company and its subsidiaries in, or in being offered an opportunity to participate in, business opportunities that are from time to time presented to any of either the Electrum Parties or MERS Party or any of their respective officers, directors, agents, shareholders, members, partners, Affiliates and subsidiaries (other than the Company and its subsidiaries) (each, a “Specified Party”), even if the opportunity is one that the Company or its subsidiaries might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so and each such Specified Party shall have no duty to communicate or offer such business opportunity to the Company and, to the fullest extent permitted by applicable law, shall not be liable to the Company or any of its subsidiaries for breach of any fiduciary or other duty, as a Director or officer or otherwise, by reason of the fact that such Specified Party pursues or acquires such business opportunity, directs such business opportunity to another Person or fails to present such business opportunity, or information regarding such business opportunity, to the Company or its subsidiaries. Notwithstanding the foregoing, a Specified Party who is a Director or officer of the Company and who is offered a business opportunity in his or her capacity as a Director or officer of the Company (a “Directed Opportunity”) shall be obligated to communicate such Directed Opportunity to the Company, provided, however, that all of the protections of this Section 5.03 shall otherwise apply to the Specified Parties with respect to such Directed Opportunity, including, without limitation, the ability of the Specified Parties to pursue or acquire such Directed Opportunity or to direct such Directed Opportunity to another Person.
(b) Neither the amendment nor repeal of this Section 5.03, nor the adoption of any provision of the Governing Documents, nor, to the fullest extent permitted by the General Corporation Law of the State of Delaware, any modification of law, shall adversely affect any right or protection of any person granted pursuant hereto existing at, or arising out of or related to any event, act or omission that occurred prior to, the time of such amendment, repeal, adoption or modification (regardless of when any proceeding (or part thereof) relating to such event, act or omission arises or is first threatened, commenced or completed).
(c) If any provision or provisions of this Section 5.03 shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (i) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Section 5.03 (including, without limitation, each portion of any paragraph of this Section 5.03 containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (ii) to the fullest extent possible, the provisions of this Section 5.03 (including, without limitation, each such portion of any paragraph of this Section 5.03 containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Company to protect its directors, officers, employees and agents from personal liability in respect of their good faith service to or for the benefit of the Company to the fullest extent permitted by law.
(d) This Section 5.03 shall not limit any protections or defenses available to, or indemnification rights of, any director or officer of the Company under this Agreement, the Certificate of Incorporation or applicable law.
Section 5.04. Termination. This Agreement shall terminate on the first day that none of the Stockholders has the right to nominate a Director pursuant to Section 3.01; provided that termination of this Agreement shall not relieve any Party for liability for any breach of this Agreement prior to such termination.
Section 5.05. Subsequent Acquisition of Shares; Other Activities. Any Company Shares acquired subsequent to the date hereof by a Stockholder shall be subject to the terms and conditions of this Agreement.
Section 5.06. Severability. Except as set forth with greater specificity in Section 5.03(c), in the event that any provision of this Agreement shall be invalid, illegal or unenforceable, such provision shall be construed by limiting it so as to be valid, legal and enforceable to the maximum extent provided by law and the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby.
Section 5.07. Entire Agreement. This Agreement, the Governing Documents, the Registration Rights Agreement and the other agreements referenced herein and therein constitute the entire agreement among the Parties with respect to the subject matter hereof, and supersede any prior agreement or understanding among them with respect to the matters referred to herein.
Section 5.08. Amendment. This Agreement may not be amended, modified, supplemented, waived or terminated (other than pursuant to Section 5.04) except with the written consent of the Stockholder Majority; provided that, any amendment, modification, supplement, waiver or termination that (a) materially and adversely affects the rights of any Stockholder under this Agreement disproportionately vis-à-vis any other Stockholder (each an “Affected Stockholder”) will require both (i) the written consent of the Stockholder Majority and (ii) the written consent of Affected Stockholders holding a majority of the then outstanding Company Shares then held by all Affected Stockholders and (b) adversely affects the rights of the Company under this Agreement, imposes additional obligations on the Company, or amends or modifies Section 3.01, Section 3.02, Article 5, and any corresponding definitions in Article 1, will require both (i) the written consent of the Stockholder Majority and (ii) the written consent of the Company with the approval of a majority of the independent directors of the Company.
Section 5.09. Waiver. Except as set forth in Section 5.08, no waiver of any breach of any of the terms of this Agreement shall be effective unless such waiver is expressly made in writing and executed and delivered by the Party against whom such waiver is claimed. Waiver by any Party of any breach or default by any other Party of any of the terms of this Agreement shall not operate as a waiver of any other breach or default, whether similar to or different from the breach or default waived. No waiver of any provision of this Agreement shall be implied from any course of dealing between the Parties or from any failure by any Party to assert its or his or her rights hereunder on any occasion or series of occasions.
Section 5.10. Counterparts. This Agreement may be executed in any number of separate counterparts each of which when so executed shall be deemed to be an original and all of which together shall constitute one and the same agreement.
Section 5.11. Notices. Unless otherwise specified herein, all notices, consents, approvals, reports, designations, requests, waivers, elections and other communications authorized or required to be
given pursuant to this Agreement shall be in writing and shall be given, made or delivered (and shall be deemed to have been duly given, made or delivered upon receipt) by personal hand-delivery, by facsimile transmission, by electronic mail, by mailing the same in a sealed envelope, registered first-class mail, postage prepaid, return receipt requested, or by air courier guaranteeing overnight delivery, addressed to the Company, the Electrum Parties and the MERS Party at the address set forth below:
(a) if to the Company, to:
Gatos Silver, Inc.
8400 E. Crescent Parkway,
Suite 600
Greenwood Village, CO 80111
Attention: Roger Johnson
Fax: (303) 784-5351
E-mail: roger.johnson@ssmines.com
with a copy to:
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, NY 10017
Attention: Richard D. Truesdell, Jr.
Facsimile No.: (212) 701-5674
E-mail: richard.truesdell@davispolk.com
with a copy to the Electrum Parties and the MERS Party at the address listed below.
If to the Electrum Parties, to:
The Electrum Group LLC
535 Madison Avenue, 12th Floor
New York, NY 10022
Attention: Andrew M. Shapiro
Fax: (646) 365-1637
Email: ashapiro@tigris.com
If to the MERS Party, to:
[Name]
[address]
Attention:
Fax:
[Email:
Section 5.12. Governing Law. This Agreement is governed by and will be construed in accordance with the laws of the State of Delaware, excluding any conflict-of-laws rule or principle (whether of Delaware or any other jurisdiction) that might refer the governance or the construction of this Agreement to the law of another jurisdiction.
Section 5.13. Jurisdiction. Each of the Parties (a) consents to submit itself to the personal jurisdiction of the Court of Chancery of the State of Delaware in the event any dispute arises out of this Agreement, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from such court and (c) agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than the Court of Chancery of the State of Delaware. Each Party hereby agrees that, to the fullest extent permitted by law, service of any process, summons, notice or document by U.S. registered mail to the respective addresses set forth in Section 5.11 shall be effective service of process for any suit or proceeding in connection with this Agreement.
Section 5.14. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF. The Company or any Stockholder may file an original counterpart or a copy of this Section 5.14 with any court as written evidence of the consent of any of the Parties to the waiver of their rights to trial by jury.
Section 5.15. Specific Performance. It is hereby agreed and acknowledged that it will be impossible to measure the money damages that would be suffered if the Parties fail to comply with any of the obligations imposed on them by this Agreement and that, in the event of any such failure, an aggrieved party will be irreparably damaged and will not have an adequate remedy at law. Each party shall, therefore, be entitled (in addition to any other remedy to which such party may be entitled at law or in equity) to seek injunctive relief, including specific performance, to enforce such obligations, without the posting of any bond, and if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties shall raise the defense that there is an adequate remedy at law.
Section 5.16. Marketing Materials. The Company grants each of the Stockholders and their respective Affiliates permission to use the Company’s name and logo in marketing materials of such Stockholder or any of its Affiliates. The Stockholders and their respective Affiliates, as applicable, shall include a trademark attribution notice giving notice of the Company’s ownership of its trademarks in the marketing materials in which the Company’s name and logo appear.
Section 5.17. Adjustments. All references in this Agreement to Company Shares shall be appropriately adjusted for any stock dividends, splits, reverse splits, combinations, reclassifications, recapitalizations, reorganizations and the like occurring after the date hereof.
Section 5.18. No Third Party Beneficiaries. Except as specifically provided in Section 5.02 and as otherwise provided herein, this Agreement is not intended to confer upon any Person, except for the parties, any rights or remedies hereunder.
Section 5.19. Indemnification. The Company will indemnify, exonerate and hold the Stockholders and each of their respective partners, stockholders, members, directors, officers, fiduciaries, managers, controlling Persons, employees and agents of each of the partners, stockholders, members, directors, officers, fiduciaries, managers, controlling Persons, employees and agents of each of the foregoing (collectively, the “Indemnified Parties”) free and harmless from and against any and all actions, causes of action, suits, claims, liabilities, losses, damages and costs and other out-of-pocket expenses in connection therewith (including reasonable attorneys’ fees and expenses) incurred by the Indemnified Parties or any of them before or after the date of this Agreement (collectively, the “Indemnified Liabilities”), arising out of any actual or threatened action, cause of action, suit, or claim
arising directly or indirectly out of such Stockholder’s or its other Indemnified Party’s actual, alleged or deemed control or ability to influence the Company or any of its subsidiaries or the actual or alleged act or omission of such Stockholder’s Director nominee(s) including for any alleged act or omission arising out of or in connection with the IPO (other than any such Indemnified Liabilities that arise out of any breach of this Agreement by such Indemnified Party or other related Persons); provided that if and to the extent that the foregoing undertaking may be unavailable or unenforceable for any reason, the Company hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. The rights of any Indemnified Party to indemnification hereunder will be in addition to any other rights any such Person may have under any other agreement or instruction to which such Indemnified Party is or becomes a party or is or otherwise becomes a beneficiary or under law or regulation or under the Governing Documents of the Company or constitutive documents of any of its subsidiaries and shall extend to such Indemnified Party’s successors and assigns. Each of the Indemnified Parties shall be a third party beneficiary of the rights conferred to such Indemnified Party in this Section 5.19.
* * *
IN WITNESS WHEREOF, the parties set forth below have duly executed this Agreement as of the day and year first above written.
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GATOS SILVER, INC. |
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[Signature Page to Shareholders Agreement]
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ELECTRUM SILVER US LLC |
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ELECTRUM SILVER US II LLC |
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TIGRIS FINANCIAL GROUP LTD. |
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GRAT HOLDINGS LLC |
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MANUL CAPITAL MANAGEMENT LLC |
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THE MUNICIPAL EMPLOYEES’ RETIREMENT SYSTEM OF MICHIGAN |
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[Signature Page to Shareholders Agreement]
INDEMNITY AGREEMENT
This Indemnity Agreement (this “Agreement”), dated as of , is made by and between Gatos Silver, Inc., a Delaware corporation (the “Company”), and , an [director][officer] of the Company (the “Indemnitee”).
RECITALS
A. The Company is aware that competent and experienced persons are increasingly reluctant to serve as directors or officers of corporations unless they are protected by comprehensive liability insurance and/or indemnification, due to increased exposure to litigation costs and risks resulting from their service to such corporations, and due to the fact that the exposure frequently bears no reasonable relationship to the compensation of such directors and officers;
B. Based on their experience as business managers, the Board of Directors of the Company (the “Board”) has concluded that, to retain and attract talented and experienced individuals to serve as directors and officers of the Company, and to encourage such individuals to take the business risks necessary for the success of the Company, it is necessary for the Company contractually to indemnify officers and directors and to assume for itself maximum liability for expenses and damages in connection with claims against such directors and officers in connection with their service to the Company;
C. Section 145 of the General Corporation Law of the State of Delaware, under which the Company is organized (the “Law”), empowers the Company to indemnify by agreement its directors, officers, employees and agents, and persons who serve, at the request of the Company, as directors, officers, employees or agents of other corporations or enterprises, and expressly provides that the indemnification provided by the Law is not exclusive; and
D. The Company desires and has requested the Indemnitee to serve or continue to serve as a director or officer of the Company free from undue concern for claims for damages arising out of or related to such services to the Company.
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:
1. Definitions.
1.1 Agent. For the purposes of this Agreement, “agent” of the Company means any person who is or was a director or officer of the Company or any subsidiary of the Company; or is or was serving at the request of, for the convenience of, or to represent the interest of the Company or any subsidiary of the Company as a director or officer of another foreign or domestic corporation, partnership, joint venture, trust, other legal entity, or other enterprise or an affiliate of the Company. The term “enterprise” includes any employee benefit plan of the Company, its subsidiaries, affiliates and predecessor corporations.
1.2 Change-in-Control. For the purposes of this Agreement, “Change-in-Control” means:
(a) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than a trustee or other fiduciary holding securities of the Company under an employee benefit plan of the Company or its subsidiaries, becomes the “beneficial owner” (as defined in Rule 13d-3 promulgated
under the Exchange Act), directly or indirectly (excluding securities acquired directly from the Company), of securities of the Company representing at least thirty-five percent (35%) of (A) the then-outstanding shares of common stock of the Company or (B) the combined voting power of the Company’s then-outstanding securities;
(b) the consummation of a merger or consolidation, or series of related transactions, which results in the voting securities of the Company outstanding immediately prior thereto failing to continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity), directly or indirectly, at least fifty percent (50%) of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation;
(c) a change in the composition of the Company’s Board occurring within a 24-month period, as a result of which fewer than a majority of the directors are Incumbent Directors;
(d) the sale or disposition of all or substantially all of the Company’s assets (or consummation of any transaction, or series of related transactions, having similar effect); or
(e) stockholder approval of the dissolution or liquidation of the Company.
1.3 Expenses. For purposes of this Agreement, “expenses” includes all direct and indirect costs of any type or nature whatsoever (including, without limitation, all attorneys’ fees and related disbursements and other out-of-pocket costs) actually and reasonably incurred by the Indemnitee in connection with the investigation, defense or appeal of, or being or preparing to be a witness in, or otherwise participating or having involvement in, an actual, threatened or potential proceeding or establishing or enforcing a right to indemnification or advancement of expenses under this Agreement, Section 145 or otherwise.
1.4 Incumbent Directors. For purposes of this Agreement, “Incumbent Directors” means directors who either (i) are members of the Board as of the date hereof, or (ii) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an accrual or threatened proxy contest relating to the election of directors to the Company).
1.5 Proceeding. For the purposes of this Agreement, “proceeding” means any threatened, potential, pending or completed action, arbitration, alternate dispute resolution, investigation, inquiry, suit or other proceeding, whether civil, criminal, administrative, investigative or any other type whatsoever.
1.6 Subsidiary. For purposes of this Agreement, “subsidiary” means any corporation of which more than fifty percent (50%) of the outstanding voting securities is owned directly or indirectly by the Company, by the Company and one or more of its subsidiaries or by one or more of the Company’s subsidiaries.
2. Agreement to Serve. The Indemnitee agrees to serve and/or continue to serve as an agent of the Company, at the will of the Company (or under separate agreement, if such agreement exists), in the capacity the Indemnitee currently serves as an agent of the Company, faithfully and to the best of [his][her] ability, so long as [he][she] is duly appointed or elected and qualified in accordance with the
applicable provisions of the charter documents of the Company or any subsidiary of the Company; provided, however, that the Indemnitee may at any time and for any reason resign from such position (subject to any contractual obligation that the Indemnitee may have assumed apart from this Agreement), and the Company or any subsidiary shall have no obligation under this Agreement to continue the Indemnitee in any such position.
3. Directors’ and Officers’ Insurance.
3.1 D&O Insurance. The Company shall, to the extent that the Board determines it to be economically reasonable, maintain a policy of directors’ and officers’ liability insurance (“D&O Insurance”), on such terms and conditions as may be approved by the Board.
3.2 Triggering Event. In the event of a Change-in-Control or the Company becomes insolvent (including being placed into receivership or entering the federal bankruptcy process or similar process) (each, a “Triggering Event”), the Company shall maintain in force D&O Insurance policies, for a period of six years following the Triggering Event, which include at least the same or better limits and equivalent terms as are in effect at the time of the Triggering Event with the Company’s then-current insurer or comparable insurers that have (i) equal or better insurance ratings and (ii) an equal or higher policy holder surplus as the Company’s then-current insurer.
4. Mandatory Indemnification. Subject to Section 9 below, the Company shall indemnify the Indemnitee as follows:
4.1 Third Party Actions. If the Indemnitee is a person who was or is a party or is threatened to be made a party to any proceeding (other than an action by or in the right of the Company) by reason of the fact that [he][she] is or was an agent of the Company, or by reason of anything done or not done by [him][her] in any such capacity, against any and all expenses and liabilities of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) actually and reasonably incurred by [him][her] in connection with the investigation, defense, settlement or appeal of such proceeding if [he][she] acted in good faith and in a manner [he][she] reasonably believed to be in, or not opposed to, the best interests of the Company and, with respect to any criminal action or proceeding, had no reasonable cause to believe [his][her] conduct was unlawful;
4.2 Derivative Actions. If the Indemnitee is a person who was or is a party or is threatened to be made a party to any proceeding by or in the right of the Company to procure a judgment in its favor by reason of the fact that [he][she] is or was an agent of the Company, or by reason of anything done or not done by [him][her] in any such capacity, against any amounts paid in settlement of any such proceeding and all expenses actually and reasonably incurred by [him][her] in connection with the investigation, defense, settlement or appeal of such proceeding if [he][she] acted in good faith and in a manner [he][she] reasonably believed to be in, or not opposed to, the best interests of the Company; except that no indemnification under this subsection shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Company, unless and only to the extent that the Court of Chancery or the court in which such proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such amounts which the Court of Chancery or such other court shall deem proper;
4.3 Exception for Amounts Covered by Insurance. Notwithstanding the foregoing, the Company shall not be obligated to indemnify the Indemnitee for expenses or liabilities of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties and amounts
paid in settlement) to the extent such have been paid directly to the Indemnitee by D&O Insurance;
4.4 Indemnification for Expenses as a Witness. Notwithstanding any other provision of this Agreement, to the extent that the Indemnitee is, by reason of [his][her] status as an agent, a witness in any proceeding to which the Indemnitee is not a party and is not threatened to be made a party, [he][she] shall be indemnified against all expenses actually and reasonably incurred by [him][her] or on [his][her] behalf in connection therewith; and
4.5 Third-Party Indemnification. The Company hereby acknowledges that the Indemnitee has or may from time to time obtain certain rights to indemnification, advancement of expenses and/or insurance provided by one or more third parties (collectively, the “Third-Party Indemnitors”). The Company hereby agrees that the Company is the indemnitor of first resort (i.e., its obligations to Indemnitee are primary and any obligation of the Third-Party Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by the Indemnitee are secondary), and that the Company will not assert that the Indemnitee must seek expense advancement or reimbursement, or indemnification, from any Third-Party Indemnitor before the Company must perform its expense advancement and reimbursement, and indemnification obligations, under this Agreement. No advancement or payment by the Third-Party Indemnitors on behalf of the Indemnitee with respect to any claim for which Indemnitee has sought indemnification from the Company shall affect the foregoing. The Third-Party Indemnitors shall be subrogated to the extent of such advancement or payment to all of the rights of recovery which the Indemnitee would have had against the Company if the Third-Party Indemnitors had not advanced or paid any amount to or on behalf of the Indemnitee. If for any reason a court of competent jurisdiction determines that the Third-Party Indemnitors are not entitled to the subrogation rights described in the preceding sentence, the Third-Party Indemnitors shall have a right of contribution by the Company to the Third-Party Indemnitors with respect to any advance or payment by the Third-Party Indemnitors to or on behalf of the Indemnitee.
5. Partial Indemnification and Contribution.
5.1 Partial Indemnification. If the Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of any expenses or liabilities of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) incurred by [him][her] in the investigation, defense, settlement or appeal of a proceeding but is not entitled, however, to indemnification for all of the total amount thereof, then the Company shall nevertheless indemnify the Indemnitee for such total amount except as to the portion thereof to which the Indemnitee is not entitled to indemnification.
5.2 Contribution. If the Indemnitee is not entitled to the indemnification provided in Section 4 for any reason other than the statutory limitations set forth in the Law, then in respect of any threatened, pending or completed proceeding in which the Company is jointly liable with the Indemnitee (or would be if joined in such proceeding), the Company shall contribute to the amount of expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by the Indemnitee in such proportion as is appropriate to reflect (i) the relative benefits received by the Company on the one hand and the Indemnitee on the other hand from the transaction from which such proceeding arose and (ii) the relative fault of the Company on the one hand and of the Indemnitee on the other hand in connection with the events which resulted in such expenses, judgments, fines or settlement amounts, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and of the Indemnitee on the other hand shall be determined by reference to, among other things, the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent the circumstances resulting in such expenses, judgments, fines or settlement amounts.
The Company agrees that it would not be just and equitable if contribution pursuant to this Section 5 were determined by pro rata allocation or any other method of allocation that does not take account of the foregoing equitable considerations.
6. Mandatory Advancement of Expenses.
6.1 Advancement. Subject to Sections 6.3 and 9.1 below, the Company shall advance all expenses incurred by the Indemnitee in connection with the investigation, defense, settlement or appeal of any proceeding to which the Indemnitee is a party or is threatened to be made a party by reason of the fact that the Indemnitee is or was an agent of the Company or by reason of anything done or not done by [him][her] in any such capacity. The Indemnitee hereby undertakes to promptly repay such amounts advanced if, and to the extent that, it shall ultimately be determined that the Indemnitee is not entitled to be indemnified by the Company under the provisions of this Agreement, the Certificate of Incorporation or Bylaws of the Company, the Law or otherwise. The advances to be made hereunder shall be paid by the Company to the Indemnitee within thirty (30) days following delivery of a written request, including reasonable documentation, therefor by the Indemnitee to the Company.
6.2 Payment Directions. To the extent payments are required to be made hereunder, the Company shall, in accordance with Indemnitee’s request (but without duplication), (i) pay such expenses on behalf of Indemnitee, (b) advance to Indemnitee funds in an amount sufficient to pay such expenses, or (c) reimburse Indemnitee for such expenses.
6.3 Exception. Notwithstanding the foregoing provisions of this Section 6 and except as provided in the last two sentences of this Section 6.3, the Company shall not be obligated to advance any expenses to the Indemnitee arising from a lawsuit filed directly by the Company against the Indemnitee if an absolute majority of the members of the Board reasonably determines in good faith, within thirty (30) days of the Indemnitee’s request to be advanced expenses, that the facts known to them at the time such determination is made demonstrate clearly and convincingly that the Indemnitee acted in bad faith. If such a determination is made, the Indemnitee may have such decision reviewed in the Court of Chancery of Delaware or by a forum, set forth in Sections 8.3 and 8.4 hereof, with all references therein to “indemnification” being deemed to refer to “advancement of expenses,” and with respect to which the burden of proof shall be on the Company to demonstrate clearly and convincingly that, based on the facts known at the time, the Indemnitee acted in bad faith. The Company may not avail itself of the right set forth in the first sentence of this Section 6.3 as to a given lawsuit if, at any time after the occurrence of the activities or omissions that are the primary focus of the lawsuit, the Company has undergone a Change-In-Control under Section 1.2(a) hereof.
7. Notice and Other Indemnification Procedures.
7.1 Promptly after receipt by the Indemnitee of notice of the commencement of, or the threat of commencement of any proceeding, the Indemnitee shall notify the Company of the commencement or threat of commencement thereof; provided, however, that the failure of the Indemnitee to give such notice shall not affect the Indemnitee’s rights hereunder, unless the Company is materially and adversely harmed by such failure.
7.2 If, at the time of the receipt of a notice of the commencement of a proceeding pursuant to Section 7.1 hereof, the Company has D&O Insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take commercially reasonable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in
accordance with the terms of such D&O Insurance policies.
7.3 In the event the Company shall be obligated to advance the expenses for any proceeding against the Indemnitee, the Company, if appropriate, shall be entitled to assume the defense of such proceeding, upon the delivery to the Indemnitee of written notice of its election to do so. After delivery of such notice, approval of such counsel by the Indemnitee and the retention of such counsel by the Company, the Company will not be liable to the Indemnitee under this Agreement for any fees of counsel subsequently incurred by the Indemnitee with respect to the same proceeding, provided that the Indemnitee shall have the right to employ [his][her] own counsel in any such proceeding at the Indemnitee’s expense.
8. Determination of Right to Indemnification.
8.1 To the extent the Indemnitee has been successful on the merits or otherwise in defense of any proceeding referred to in Section 4.1 or 4.2 of this Agreement or in the defense of any claim, issue or matter described therein, the Company shall indemnify the Indemnitee against expenses actually and reasonably incurred by [him][her] in connection with the investigation, defense or appeal of such proceeding, or such claim, issue or matter, as the case may be.
8.2 In the event that Section 8.1 is inapplicable, or does not apply to the entire proceeding, the Company shall nonetheless indemnify the Indemnitee unless the Indemnitee has not met the applicable standard of conduct required to entitle the Indemnitee to such indemnification.
8.3 The Indemnitee shall select the forum in which the validity of such Indemnitee’s entitlement to indemnification will be heard from among the following, except that the Indemnitee may select a forum consisting of the stockholders of the Company only with the approval of the Company:
(a) A majority vote of the directors who are not parties to the proceeding for which indemnification is being sought, even if less than a quorum;
(b) A committee of such directors designated by majority vote of such directors, even if less than a quorum;
(c) If there are no such directors, or if such directors so direct, by independent legal counsel (the “Independent Counsel”) in a written opinion; or
(d) The stockholders of the Company.
8.4 The Indemnitee shall select the Independent Counsel, who shall be reasonably satisfactory to the Company. The Company shall pay the reasonable fees and expenses of the Independent Counsel.
8.5 Notwithstanding any other provision in this Agreement to the contrary, the Company shall indemnify the Indemnitee against all expenses incurred by the Indemnitee in connection with any hearing or proceeding under this Section 8 involving the Indemnitee and against all expenses incurred by the Indemnitee in connection with any other proceeding between the Company and the Indemnitee involving the interpretation or enforcement of the rights of the Indemnitee under this Agreement unless a court of competent jurisdiction finds that each of the material claims and/or defenses of the Indemnitee in any such proceeding was frivolous and not made in good faith.
9. Exceptions. Any other provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement:
9.1 Claims Initiated by Indemnitee. To indemnify or advance expenses to the Indemnitee with respect to proceedings or claims initiated or brought voluntarily by the Indemnitee and not by way of defense, except with respect to proceedings specifically authorized by the Board or brought to establish or enforce a right to indemnification and/or advancement of expenses arising under this Agreement, the charter documents of the Company or any subsidiary or any statute or law or otherwise, but such indemnification or advancement of expenses may be provided by the Company in specific cases if the Board finds it to be appropriate; or
9.2 Unauthorized Settlements. To indemnify the Indemnitee hereunder for any amounts paid in settlement of a proceeding unless the Company consents in advance in writing to such settlement; or
9.3 Securities Law Actions. To indemnify the Indemnitee on account of any suit in which judgment is rendered against the Indemnitee for (i) an accounting of profits made from the purchase or sale by the Indemnitee of securities of the Company pursuant to the provisions of Section 16(b) of Exchange Act or similar provisions of any federal, state or local law, (ii) any reimbursement of the Company by the Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by the Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act or any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), or (iii) the payment to the Company of profits arising from the purchase, sale or other acquisition or transfer by the Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act; or
9.4 Unlawful Indemnification. To indemnify the Indemnitee if a final decision by a court having jurisdiction in the matter shall determine that such indemnification is not lawful. In this respect, the Company and the Indemnitee have been advised that the Securities and Exchange Commission takes the position that indemnification for liabilities arising under the federal securities laws is against public policy and is, therefore, unenforceable and that claims for indemnification should be submitted to appropriate courts for adjudication.
10. No Imputation. The knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Company or the Company itself shall not be imputed to Indemnitee for purposes of determining any rights under this Agreement.
11. Non-Exclusivity. The provisions for indemnification and advancement of expenses set forth in this Agreement shall not be deemed exclusive of any other rights which the Indemnitee may have under any provision of law, the Company’s Certificate of Incorporation or Bylaws, the vote of the Company’s stockholders or disinterested directors, other agreements or otherwise, both as to action in the Indemnitee’s official capacity and to action in another capacity, while occupying [his][her] position as an agent of the Company, and the Indemnitee’s rights hereunder shall continue after the Indemnitee has ceased acting as an agent of the Company and shall inure to the benefit of the heirs, executors and administrators of the Indemnitee.
12. General Provisions.
12.1 Interpretation of Agreement. It is understood that the parties hereto intend this Agreement to be interpreted and enforced so as to provide indemnification and advancement of expenses to the Indemnitee to the fullest extent now or hereafter permitted by law, except as expressly limited herein.
12.2 Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever, then: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, all portions of any paragraphs of this Agreement containing any such provision held to be invalid, illegal or unenforceable that are not themselves invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Agreement (including, without limitation, all portions of any paragraphs of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable and to give effect to Section 12.1 hereof.
12.3 Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar), nor shall such waiver constitute a continuing waiver.
12.4 Subrogation. In the event of full payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee, who shall execute all documents required and shall do all acts that may be necessary or desirable to secure such rights and to enable the Company effectively to bring suit to enforce such rights.
12.5 Counterparts. This Agreement may be executed in one or more counterparts, which shall together constitute one agreement.
12.6 Successors and Assigns. The terms of this Agreement shall bind, and shall inure to the benefit of, the successors and assigns of the parties hereto.
12.7 Notice. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed duly given: (a) if delivered by hand and signed for by the party addressee; (b) if mailed by certified or registered mail, with postage prepaid, on the third business day after the mailing date; or (c) if sent by overnight courier, on the next business day after deposit with the overnight courier:
(i) if to the Company:
Gatos Silver, Inc.
8400 E. Crescent Pkwy, Suite 600
Greenwood Village, CO 80111
Attention: Roger Johnson
(ii) if to the Indemnitee, at the address indicated in the Indemnitee’s personnel or director file, as applicable, or such other address specified by the Indemnitee in writing to the Company. Either party may provide the other with notices of change of address, which shall be effective upon receipt.
12.8 Governing Law. This Agreement shall be governed exclusively by and construed according to the laws of the State of Delaware, as applied to contracts between Delaware residents entered into and to be performed entirely within Delaware.
IN WITNESS WHEREOF, the parties hereto have entered into this Indemnity Agreement effective as of the date first written above.
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By: |
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Title: |
Indemnity Agreement Signature Page
REGISTRATION RIGHTS AGREEMENT
dated as of
[·], 2020
among
GATOS SILVER, INC.
and
THE STOCKHOLDERS THAT ARE SIGNATORIES HERETO
TABLE OF CONTENTS
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ARTICLE 1
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Section 1.01. |
Definitions |
1 |
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Section 1.02. |
Other Definitional and Interpretative Provisions |
4 |
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ARTICLE 2
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Section 2.01. |
Demand Registration |
4 |
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Section 2.02. |
Piggyback Registration |
6 |
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Section 2.03. |
Lock-Up Agreements |
7 |
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Section 2.04. |
Registration Procedures |
7 |
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Section 2.05. |
Indemnification by the Company |
10 |
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Section 2.06. |
Indemnification by Participating Stockholders |
10 |
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Section 2.07. |
Conduct of Indemnification Proceedings |
11 |
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Section 2.08. |
Contribution |
11 |
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Section 2.09. |
Participation in Public Offering |
12 |
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Section 2.10. |
Other Indemnification |
13 |
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Section 2.11. |
Cooperation by the Company |
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Section 2.12. |
No Transfer of Registration Rights |
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ARTICLE 3 |
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MISCELLANEOUS |
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Section 3.01. |
Binding Effect; Assignability; Benefit |
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Section 3.02. |
Notices |
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Section 3.03. |
Waiver; Amendment; Termination |
14 |
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Section 3.04. |
Governing Law |
15 |
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Section 3.05. |
Jurisdiction |
15 |
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Section 3.06. |
Waiver of Jury Trial |
15 |
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Section 3.07. |
Specific Performance |
15 |
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Section 3.08. |
Counterparts; Effectiveness |
15 |
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Section 3.09. |
Entire Agreement |
15 |
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Section 3.10. |
Severability |
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (as it may be amended from time to time in accordance with the terms hereof, this “Agreement”), dated as of [·], 2020, is made by and among Gatos Silver, Inc., a Delaware corporation (the “Company”), and the stockholders that are or become signatories hereto (each a “Stockholder” and collectively, the “Stockholders”).
RECITALS
WHEREAS, the Company is proposing to sell Shares to the public in an initial public offering (the “IPO”); and
WHEREAS, subject to the terms and conditions herein, the Stockholders and the Company desire to enter into this Agreement to provide for certain rights and obligations of the Stockholders and the Company.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises, covenants and agreements of the parties hereto, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.01. Definitions. As used in this Agreement, the following terms have the following meanings:
“Affiliate” means (a) with respect to any Electrum Party, any Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person, (b) with respect to the MERS Party, any Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person and (c) with respect to any other Person, any Person directly or indirectly controlling or controlled by or under direct or indirect common control with such Person. It being understood and agreed that, for purposes hereof, (i) each Electrum Party shall be deemed to be an Affiliate of every other Electrum Party, (ii) neither the Company nor any subsidiary of the Company shall be deemed to be an Affiliate of any Stockholder, and, (iii) except as set forth in clause (i) above, no Stockholder shall be deemed to be an Affiliate of any other Stockholder.
“Board of Directors” means the Board of Directors of the Company.
“Business Day” means any day other than a Saturday, Sunday or day on which banking institutions in New York, New York are authorized or obligated by law or executive order to close.
“Common Equivalents” means (i) with respect to Common Stock, the number of Shares and (ii) with respect to any Company Securities that are convertible into or exchangeable for Common Stock, the number of Shares issuable in respect of the conversion or exchange of such securities into Common Stock.
“Common Stock” means the common stock of the Company, par value $0.001 per share, and any and all securities of any kind whatsoever of the Company that may be issued by the Company after the date hereof in respect of, in exchange for, or in substitution of, Common Stock, pursuant to any stock
dividends, splits, reverse splits, combinations, reclassifications, recapitalizations, reorganizations and the like occurring after the date hereof.
“Company Securities” means (i) the Common Stock, (ii) securities convertible into or exchangeable for Common Stock and (iii) any options, warrants or other rights to acquire Common Stock.
“Electrum Parties” means, collectively, Electrum Silver US LLC, Electrum Silver US II LLC, Tigris Financial Group Ltd., GRAT Holdings LLC and Manul Capital Management LLC and any Affiliates of the foregoing to whom Common Stock is Transferred by a Stockholder (as defined in the Shareholders Agreement) after the IPO Date in accordance with the Shareholders Agreement.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“FINRA” means the Financial Industry Regulatory Authority.
“Fully-Diluted” means all outstanding Shares, all Shares issuable in respect of all outstanding securities convertible into or exchangeable for Common Stock and all Shares issuable in respect of all outstanding options, warrants and other rights to acquire Common Stock; provided that, if any of the foregoing Company Securities are subject to vesting, such Company Securities subject to vesting shall be included in the definition of “Fully-Diluted” only upon and to the extent of such vesting.
“IPO Date” means the date on which the IPO is consummated.
“MERS Party” means Municipal Employees’ Retirement System of Michigan and any Affiliates of the foregoing to whom Common Stock is Transferred by a Stockholder (as defined in the Shareholders Agreement) after the IPO Date in accordance with the Shareholders Agreement.
“Other Stockholders” means all Stockholders other than the Electrum Parties and the MERS Party.
“Person” means an individual, partnership, limited liability company, corporation, trust, other entity, association, estate, unincorporated organization or a government or any agency or political subdivision thereof.
“Public Offering” means an underwritten public offering of Registrable Securities pursuant to an effective registration statement under the Securities Act, other than pursuant to a registration statement on Form S-4 or Form S-8 or any similar or successor form.
“Registrable Securities” means, at any time, any Shares until (i) a registration statement covering such Shares has been declared effective by the SEC and such Shares have been disposed of pursuant to such effective registration statement, (ii) such Shares are sold under circumstances in which all of the applicable conditions of Rule 144 (or any similar provisions then in force) under the Securities Act are met or (iii) such Shares are otherwise Transferred, the Company has delivered a new certificate or other evidence of ownership for such Shares not bearing a restricted legend and such Shares may be resold without subsequent registration under the Securities Act.
“Registration Expenses” means any and all expenses incident to the performance of or compliance with any registration or marketing of Company Securities, including all (i) registration and filing fees, and all other fees and expenses payable in connection with the listing of securities on any securities exchange or automated interdealer quotation system, (ii) fees and expenses of compliance with
any securities or “blue sky” laws (including reasonable fees and disbursements of counsel in connection with “blue sky” qualifications of the securities registered), (iii) expenses in connection with the preparation, printing, mailing and delivery of any registration statements, prospectuses and other documents in connection therewith and any amendments or supplements thereto, (iv) security engraving and printing expenses, (v) internal expenses of the Company (including all salaries and expenses of its officers and employees performing legal or accounting duties), (vi) reasonable fees and disbursements of counsel for the Company and customary fees and expenses for independent certified public accountants retained by the Company (including the expenses relating to any comfort letters or costs associated with the delivery by independent certified public accountants of any comfort letters requested pursuant to Section 2.04(h)), (vii) reasonable fees and expenses of any special experts retained by the Company (including independent mining consultants) in connection with such registration, (viii) reasonable fees, out-of-pocket costs and expenses of the Stockholders, including one counsel for all of the Stockholders participating in the offering selected (A) by the Electrum Parties, in the case of any offering in which any of the Electrum Parties participates, or (B) if no Electrum Parties participate and if the MERS Party participates, then the MERS Party, (ix) fees and expenses in connection with any review by FINRA of the underwriting arrangements or other terms of the offering, and all fees and expenses of any “qualified independent underwriter,” including the fees and expenses of any counsel thereto, (x) fees and disbursements of underwriters customarily paid by issuers or sellers of securities, but excluding any underwriting fees, discounts and commissions attributable to the sale of Registrable Securities, (xi) costs of printing and producing any agreements among underwriters, underwriting agreements, any “blue sky” or legal investment memoranda and any selling agreements and other documents in connection with the offering, sale or delivery of the Registrable Securities, (xii) transfer agents’ and registrars’ fees and expenses and the fees and expenses of any other agent or trustee appointed in connection with such offering, (xiii) expenses relating to any analyst or investor presentations or any “road shows” undertaken in connection with the registration, marketing or selling of the Registrable Securities, (xiv) fees and expenses payable in connection with any ratings of the Registrable Securities, including expenses relating to any presentations to rating agencies and (xv) all out-of pocket costs and expenses incurred by the Company or its appropriate officers in connection with their compliance with Section 2.04(m).
“Rule 144” means Rule 144 (or any successor provisions) under the Securities Act.
“SEC” means the Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended.
“Shares” means shares of Common Stock.
“Shareholders Agreement” means the shareholders agreement entered into among the Company, the Electrum Parties and the MERS Party dated as [·], 2020.
“Transfer” means (a) a direct or indirect transfer, sale, exchange, assignment, pledge, hypothecation or other encumbrance or other disposition of Common Stock, or any legal or beneficial interest therein, including the grant of an option or other right or the grant of any interest that would result in a Stockholder no longer having the power to vote, or cause to be voted, such Stockholder’s Common Stock, whether directly or indirectly, whether voluntarily, involuntarily or by operation of law or (b) any agreement to take or commit to any of the foregoing actions; and “Transferred,” “Transferee,” “Transferor,” and “Transferability” shall each have a correlative meaning. For the avoidance of doubt, a transfer, sale, exchange, assignment, pledge, hypothecation or other encumbrance or other disposition of an interest in any Stockholder, or direct or indirect parent thereof, all or substantially all of whose assets
are, directly or indirectly, Company Shares shall constitute a “Transfer” of Common Stock for purposes of this Agreement. For the avoidance of doubt, a transfer, sale, exchange, assignment, pledge, hypothecation or other encumbrance or other disposition of an interest in any Stockholder, or direct or indirect parent thereof, which has substantial assets in addition to Common Stock shall not constitute a “Transfer” of Common Stock for purposes of this Agreement.
(a) Each of the following terms is defined in the Section set forth opposite such term:
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Term |
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Section |
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Company |
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Preamble |
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Damages |
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2.05 |
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Demand Registration |
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2.01(a) |
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Indemnified Party |
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2.07 |
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Indemnifying Party |
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2.07 |
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Inspectors |
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2.04(g) |
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IPO |
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Preamble |
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Maximum Offering Size |
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2.01(d) |
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Piggyback Registration |
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2.02(a) |
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Records |
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2.04(g) |
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Registering Stockholders |
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2.01(a) |
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Requesting Stockholder |
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2.01(a) |
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Shelf Registration |
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2.01(f) |
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Stockholder |
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Preamble |
Section 1.02. Other Definitional and Interpretative Provisions.
(a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.
(b) The words “hereof,” “herein,” “hereunder” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement; and any subsection and Section references are to this Agreement unless otherwise specified.
(c) The term “including” is not limiting and means “including without limitation.”
(d) The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement.
(e) Whenever the context requires, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms.
ARTICLE 2
REGISTRATION RIGHTS
Section 2.01. Demand Registration.
(a) If at any time following the expiration of the period during which the managing underwriters for the IPO shall prohibit the Company from effecting any other public sale or distribution of
Registrable Securities, the Company shall receive a request from either the Electrum Parties or the MERS Party (that party shall be referred to herein as the “Requesting Stockholder”) that the Company effected the registration under the Securities Act of all or any portion of such Requesting Stockholder’s Registrable Securities, and specifying the intended method of disposition thereof, then the Company shall promptly give notice of such requested registration (each such request shall be referred to herein as a “Demand Registration”) at least 2 Business Days prior to the anticipated pricing date of the offering relating to such Demand Registration to the other Stockholders and thereupon shall use its best efforts to effect, as expeditiously as possible, the registration under the Securities Act of:
(i) all Registrable Securities for which the Requesting Stockholders have requested registration under this Section 2.01; and
(ii) subject to the restrictions set forth in Sections 2.01(d) and 2.02, all other Registrable Securities of the same class as those requested to be registered by the Requesting Stockholders that any Stockholders with rights to request registration under Section 2.01 (all such Stockholders, together with the Requesting Stockholders, and any Stockholders participating in a Piggyback Registration pursuant to Section 2.02, the “Registering Stockholders”) have requested the Company to register by request received by the Company within 1 Business Day after such Stockholders receive the Company’s notice of the Demand Registration;
all to the extent necessary to permit the disposition (in accordance with the intended methods thereof as aforesaid) of the Registrable Securities so to be registered; provided that, subject to Section 2.01(c), the Company shall not be obligated to effect more than three Demand Registrations within a 12-month period.
(b) The Company shall be liable for and pay all Registration Expenses in connection with any Demand Registration, regardless of whether such Registration is effected.
(c) A Demand Registration shall not be deemed to have occurred:
(i) unless the registration statement relating thereto (A) has become effective under the Securities Act and (B) has remained effective for a period of at least 180 days (or such shorter period in which all Registrable Securities of the Registering Shareholders included in such registration have actually been sold thereunder); provided that such registration statement shall not be considered a Demand Registration if, after such registration statement becomes effective, (1) such registration statement is interfered with by any stop order, injunction or other order or requirement of the SEC or other governmental agency or court and (2) less than 75% of the Registrable Securities included in such registration statement have been sold thereunder; or
(ii) if the Maximum Offering Size is reduced in accordance with Section 2.01(d) such that less than 66 2/3% of the Registrable Securities of the Requesting Shareholders sought to be included in such registration are included.
(d) If a Demand Registration involves an underwritten Public Offering and the managing underwriter advises the Company and the Requesting Stockholders that, in its view, the number of shares of Registrable Securities requested to be included in such registration (including any securities that the Company proposes to be included that are not Registrable Securities) exceeds the largest number of shares that can be sold without having an adverse effect on such offering, including the price at which
such shares can be sold (the “Maximum Offering Size”), the Company shall include in such registration, in the priority listed below, up to the Maximum Offering Size:
(i) first, all Registrable Securities of a party with rights under Section 2.01 (allocated, if necessary for the offering not to exceed the Maximum Offering Size, pro rata among such entities on the basis of the relative number of Registrable Securities so requested to be included in such registration by each such Stockholder); and
(ii) second, all Registrable Securities requested to be included in such registration by any other Registering Stockholder or Person, including the Company (allocated, if necessary for the offering not to exceed the Maximum Offering Size, pro rata among such other Stockholders on the basis of the relative number of Registrable Securities so requested to be included in such registration by each such Stockholder).
(e) Upon notice to each Requesting Stockholder, the Company may postpone effecting a registration pursuant to this Section 2.01 on one occasion during any period of six consecutive months for a reasonable time specified in the notice but not exceeding 90 days (which period may not be extended or renewed), if (i) an investment banking firm of recognized national standing shall advise the Company and the Requesting Stockholders in writing that effecting the registration would materially and adversely affect an offering of securities of such Company the preparation of which had then been commenced or (ii) the Company is in possession of material non-public information the disclosure of which during the period specified in such notice the Company reasonably believes would not be in the best interests of the Company.
(f) At any time following the consummation of the IPO, upon the request of the Electrum Parties, the Company shall use its best efforts to file a “shelf” registration statement (the “Shelf Registration”) with respect to the Registrable Securities on an appropriate form pursuant to Rule 415 (or any similar provision that may be adopted by the SEC) under the Securities Act and to cause such Shelf Registration to become effective and to keep such Shelf Registration in effect until the Stockholders no longer hold any Registrable Securities. Any offer or sale of Registrable Securities pursuant to the Shelf Registration in any underwritten Public Offering shall be deemed to be a Demand Registration subject to the provisions of Section 2.01(a).
Section 2.02. Piggyback Registration.
(a) If the Company proposes to register any Company Securities under the Securities Act (other than a registration on Form S-8, S-4 or F-4, or any successor forms, relating to Shares issuable upon exercise of employee stock options or in connection with any employee benefit or similar plan of the Company or in connection with a direct or indirect acquisition by the Company of another Person), whether or not for sale for its own account, the Company shall each such time give prompt notice at least 2 Business Days prior to the anticipated pricing date of the offering relating to such registration to each Stockholder, which notice shall set forth such Stockholder’s rights under this Section 2.02 and shall offer such Stockholder the opportunity to include in such registration statement the number of Registrable Securities of the same class or series as those proposed to be registered as each such Stockholder may request (a “Piggyback Registration”), subject to the provisions of Section 2.02(b). Upon the request of any such Stockholder made within 1 Business Day after the receipt of notice from the Company (which request shall specify the number of Registrable Securities intended to be registered by such Stockholder), the Company shall use its reasonable best efforts to effect the registration under the Securities Act of all Registrable Securities that the Company has been so requested to register by all such Stockholders, to the
extent requisite to permit the disposition of the Registrable Securities so to be registered; provided that (i) if such registration involves an underwritten Public Offering, all such Stockholders requesting to be included in the Company’s registration must sell their Registrable Securities to the underwriters selected as provided in Section 2.04(f) (i) on the same terms and conditions as apply to the Company or the Requesting Stockholders, as applicable, and (ii) if, at any time after giving notice of its intention to register any Company Securities pursuant to this Section 2.02(a) and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to register such securities, the Company shall give notice to all such Stockholders and, thereupon, shall be relieved of its obligation to register any Registrable Securities in connection with such registration. No registration effected under this Section 2.02 shall relieve the Company of its obligations to effect a Demand Registration to the extent required by Section 2.01. The Company shall pay all Registration Expenses in connection with each Piggyback Registration.
(b) If a Piggyback Registration involves an underwritten Public Offering (other than any Demand Registration, in which case the provisions with respect to priority of inclusion in such offering set forth in Section 2.01(d) shall apply) and the managing underwriter advises the Company that, in its view, the number of Registrable Securities that the Company and such Stockholders intend to include in such registration exceeds the Maximum Offering Size, the Company shall include in such registration, in the following priority, up to the Maximum Offering Size:
(i) first, so much of the Registrable Securities proposed to be registered for the account of the Company as would not cause the offering to exceed the Maximum Offering Size;
(ii) second, all Registrable Securities of a party with rights under Section 2.01 (allocated, if necessary for the offering not to exceed the Maximum Offering Size, pro rata among such Stockholders on the basis of the relative number of shares of Registrable Securities so requested to be included in such registration by each); and
(iii) third, all Registrable Securities requested to be included in such registration by any Stockholders who do not have Demand Registration rights pursuant to Section 2.01 (allocated, if necessary for the offering not to exceed the Maximum Offering Size, pro rata among such Stockholders on the basis of the relative number of shares of Registrable Securities so requested to be included in such registration by each such Stockholder).
Section 2.03. Lock-Up Agreements. If any registration of Registrable Securities shall be effected in connection with a Public Offering, neither the Company nor any Stockholder who is a director or executive officer of the Company shall effect any public sale or distribution, including any sale pursuant to Rule 144, of Registrable Securities during the period beginning 14 days prior to the anticipated pricing of the offering until 180 days following the pricing of the offering (subject to customary exceptions to be agreed upon with the lead-managing underwriter for the Public Offering).
Section 2.04. Registration Procedures. Whenever Stockholders request that any Registrable Securities be registered pursuant to Section 2.01 or 2.02, subject to the provisions of such Sections, the Company shall use its reasonable best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof as quickly as practicable, and, in connection with any such request:
(a) The Company shall as expeditiously as possible prepare and file with the SEC a registration statement on any form for which the Company then qualifies or that counsel for the Company
shall deem appropriate and which form shall be available for the sale of the Registrable Securities to be registered thereunder in accordance with the intended method of distribution thereof, and use its reasonable best efforts to cause such filed registration statement to become and remain effective for a period of not less than 180 days, or in the case of a shelf registration statement, one year (or such shorter period in which all of the Registrable Securities of the Stockholders included in such registration statement shall have actually been sold thereunder).
(b) Prior to filing a registration statement or prospectus or any amendment or supplement thereto, the Company shall, if requested, furnish to each participating Stockholder and each underwriter, if any, of the Registrable Securities covered by such registration statement copies of such registration statement as proposed to be filed, and thereafter the Company shall furnish to such Stockholder and underwriter, if any, such number of copies of such registration statement, each amendment and supplement thereto (in each case including all exhibits thereto and documents incorporated by reference therein), the prospectus included in such registration statement (including each preliminary prospectus and any summary prospectus) and any other prospectus filed under Rule 424, Rule 430A, Rule 430B or Rule 430C under the Securities Act and such other documents as such Stockholder or underwriter may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Stockholder. Each Stockholder shall have the right to request that the Company modify any information contained in such registration statement, amendment and supplement thereto pertaining to such Stockholder and the Company shall use its reasonable best efforts to comply with such request; provided, however, that the Company shall not have any obligation so to modify any information if the Company reasonably expects that so doing would cause the prospectus to contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading.
(c) After the filing of the registration statement, the Company shall (i) cause the related prospectus to be supplemented by any required prospectus supplement, and, as so supplemented, to be filed pursuant to Rule 424 under the Securities Act, (ii) comply with the provisions of the Securities Act with respect to the disposition of all Securities covered by such registration statement during the applicable period in accordance with the intended methods of disposition by the Stockholders thereof set forth in such registration statement or supplement to such prospectus and (iii) promptly notify each Stockholder holding Registrable Securities covered by such registration statement of any stop order issued or threatened by the SEC or any state securities commission and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered.
(d) The Company shall use its reasonable best efforts to (i) register or qualify the Registrable Securities covered by such registration statement under such other securities or “blue sky” laws of such jurisdictions in the United States as any Registering Stockholder holding such Registrable Securities reasonably (in light of such Stockholder’s intended plan of distribution) requests and (ii) cause such Registrable Securities to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that may be reasonably necessary or advisable to enable such Stockholder to consummate the disposition of the Registrable Securities owned by such Stockholder; provided that the Company shall not be required to (A) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 2.04(d), (B) subject itself to taxation in any such jurisdiction or (C) consent to general service of process in any such jurisdiction.
(e) The Company shall immediately notify each Registering Stockholder holding such Registrable Securities covered by such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the occurrence of an event requiring the preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and promptly prepare and make available to each such Stockholder and file with the SEC any such supplement or amendment.
(f) The Electrum Parties shall have the right, in their sole discretion, to select an underwriter or underwriters in connection with any Public Offering resulting from the exercise by the Electrum Parties of a Demand Registration. The Company shall select an underwriter or underwriters in connection with any other Public Offering. In connection with any Public Offering, the Company shall enter into customary agreements (including an underwriting agreement in customary form) and take such all other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Securities in any such Public Offering, including the engagement of a “qualified independent underwriter” in connection with the qualification of the underwriting arrangements with FINRA.
(g) Upon execution of confidentiality agreements in form and substance reasonably satisfactory to the Company, the Company shall make available for inspection by any Stockholder and any underwriter participating in any disposition pursuant to a registration statement being filed by the Company pursuant to this Section 2.04 and any attorney, accountant or other professional retained by any such Stockholder or underwriter (collectively, the “Inspectors”), all financial and other records (including technical information), pertinent corporate documents and properties of the Company (collectively, the “Records”) as shall be reasonably necessary or desirable to enable them to exercise their due diligence responsibility, and cause the Company’s officers, directors and employees to supply all information reasonably requested by any Inspectors in connection with such registration statement. Records that the Company determines, in good faith, to be confidential and that it notifies the Inspectors are confidential shall not be disclosed by the Inspectors unless (i) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in such registration statement or (ii) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction. Each Stockholder agrees that information obtained by it as a result of such inspections shall be deemed confidential and shall not be used by it or its Affiliates as the basis for any market transactions in the Registrable Securities unless and until such information is made generally available to the public. Each Stockholder further agrees that, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, it shall give notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of the Records deemed confidential.
(h) The Company shall furnish to each Registering Stockholder and to each such underwriter, if any, a signed counterpart, addressed to such Registering Stockholder or underwriter, of (i) an opinion or opinions of counsel to the Company and (ii) a comfort letter or comfort letters from the Company’s independent public accountants, each in customary form and covering such matters of the kind customarily covered by opinions or comfort letters, as the case may be, as a majority of such Stockholders or the managing underwriter therefor reasonably requests.
(i) The Company shall otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC, and make available to its security holders, as soon as reasonably practicable, an earnings statement or such other document that shall satisfy the provisions of Section 11(a) of the Securities Act and the requirements of Rule 158 thereunder.
(j) The Company may require each Stockholder promptly to furnish in writing to the Company such information regarding the distribution of the Registrable Securities as the Company may from time to time reasonably request and such other information as may be legally required in connection with such registration.
(k) Each Stockholder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 2.04(e), such Stockholder shall forthwith discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such Stockholder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 2.04(e), and, if so directed by the Company, such Stockholder shall deliver to the Company all copies, other than any permanent file copies then in such Stockholder’s possession, of the most recent prospectus covering such Registrable Securities at the time of receipt of such notice. If the Company shall give such notice, the Company shall extend the period during which such registration statement shall be maintained effective (including the period referred to in Section 2.04(a)) by the number of days during the period from and including the date of the giving of notice pursuant to Section 2.04(e) to the date when the Company shall make available to such Stockholder a prospectus supplemented or amended to conform with the requirements of Section 2.04(e).
(l) The Company shall use its reasonable best efforts to list all Registrable Securities covered by such registration statement on any securities exchange or quotation system on which any of the Registrable Securities are then listed or traded.
(m) The Company shall have appropriate officers of the Company (i) prepare and make presentations at any “road shows” and before analysts and rating agencies, as the case may be, (ii) take other actions to obtain ratings for any Registrable Securities and (iii) otherwise use their reasonable best efforts to cooperate as reasonably requested by the underwriters in the offering, marketing or selling of the Registrable Securities.
Section 2.05. Indemnification by the Company. The Company agrees to indemnify and hold harmless each Stockholder beneficially owning any Registrable Securities covered by a registration statement, its officers, directors, employees, partners and agents, and each Person, if any, who controls such Stockholder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages, liabilities and expenses (including reasonable expenses of investigation and reasonable attorneys’ fees and expenses) (“Damages”) caused by or relating to any untrue statement or alleged untrue statement of a material fact contained in any registration statement or prospectus relating to the Registrable Securities (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or any preliminary prospectus or free writing prospectus (as defined in Rule 405 under the Securities Act), or caused by or relating to any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such Damages are caused by or related to any such untrue statement or omission or alleged untrue statement or omission so made based upon information furnished in writing to the Company by such Stockholder or on such Stockholder’s behalf expressly for use therein. The Company also agrees to indemnify any underwriters of the Registrable Securities, their officers and directors and each Person who controls such underwriters within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act on substantially the same basis as that of the indemnification of the Stockholders provided in this Section 2.05.
Section 2.06. Indemnification by Participating Stockholders. Each Stockholder holding Registrable Securities included in any registration statement agrees, severally but not jointly, to indemnify
and hold harmless the Company, its officers, directors and agents and each Person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Company to such Stockholder, but only with respect to information furnished in writing by such Stockholder or on such Stockholder’s behalf expressly for use in any registration statement or prospectus relating to the Registrable Securities, or any amendment or supplement thereto, or any preliminary prospectus. Each such Stockholder also agrees to indemnify and hold harmless underwriters of the Registrable Securities, their officers and directors and each Person who controls such underwriters within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act on substantially the same basis as that of the indemnification of the Company provided in this Section 2.06. As a condition to including Registrable Securities in any registration statement filed in accordance with Article 2, the Company may require that it shall have received an undertaking reasonably satisfactory to it from any underwriter to indemnify and hold it harmless to the extent customarily provided by underwriters with respect to similar securities. No Stockholder shall be liable under this Section 2.06 for any Damages in excess of the net proceeds realized by such Stockholder in the sale of Registrable Securities of such Stockholder to which such Damages relate.
Section 2.07. Conduct of Indemnification Proceedings. If any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to this Article 2, such Person (an “Indemnified Party”) shall promptly notify the Person against whom such indemnity may be sought (the “Indemnifying Party”) in writing and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Party, and shall assume the payment of all fees and expenses; provided that the failure of any Indemnified Party so to notify the Indemnifying Party shall not relieve the Indemnifying Party of its obligations hereunder except to the extent that the Indemnifying Party is materially prejudiced by such failure to notify. In any such proceeding, any Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such counsel or (ii) in the reasonable judgment of such Indemnified Party representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that, in connection with any proceeding or related proceedings in the same jurisdiction, the Indemnifying Party shall not be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) at any time for all such Indemnified Parties, and that all such fees and expenses shall be reimbursed as they are incurred. In the case of any such separate firm for the Indemnified Parties, such firm shall be designated in writing by the Indemnified Parties. The Indemnifying Party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent, or if there be a final judgment for the plaintiff, the Indemnifying Party shall indemnify and hold harmless such Indemnified Parties from and against any loss or liability (to the extent stated above) by reason of such settlement or judgment. Without the prior written consent of the Indemnified Party, no Indemnifying Party shall effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability arising out of such proceeding.
Section 2.08. Contribution. If the indemnification provided for in this Article 2 is unavailable to the Indemnified Parties in respect of any Damages, then each such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Damages (i) as between the Company and the Stockholders holding Registrable
Securities covered by a registration statement on the one hand and the underwriters on the other, in such proportion as is appropriate to reflect the relative benefits received by the Company and such Stockholders on the one hand and the underwriters on the other, from the offering of the Registrable Securities, or if such allocation is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits but also the relative fault of the Company and such Stockholders on the one hand and of such underwriters on the other in connection with the statements or omissions that resulted in such Damages, as well as any other relevant equitable considerations and (ii) as between the Company on the one hand and each such Stockholder on the other, in such proportion as is appropriate to reflect the relative fault of the Company and of each such Stockholder in connection with such statements or omissions, as well as any other relevant equitable considerations. The relative benefits received by the Company and such Stockholders on the one hand and such underwriters on the other shall be deemed to be in the same proportion as the total proceeds from the offering (net of underwriting discounts and commissions but before deducting expenses) received by the Company and such Stockholders bear to the total underwriting discounts and commissions received by such underwriters, in each case as set forth in the table on the cover page of the prospectus. The relative fault of the Company and such Stockholders on the one hand and of such underwriters on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company and such Stockholders or by such underwriters. The relative fault of the Company on the one hand and of each such Stockholder on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
The Company and the Stockholders agree that it would not be just and equitable if contribution pursuant to this Section 2.08 were determined by pro rata allocation (even if the underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an Indemnified Party as a result of the Damages referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 2.08, no underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any Damages that such underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission, and no Stockholder shall be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities of such Stockholder were offered to the public (less underwriters’ discounts and commissions) exceeds the amount of any Damages that such Stockholder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. Each Stockholder’s obligation to contribute pursuant to this Section 2.08 is several in the proportion that the proceeds of the offering received by such Stockholder bears to the total proceeds of the offering received by all such Stockholders and not joint.
Section 2.09. Participation in Public Offering. No Stockholder may participate in any Public Offering hereunder unless such Stockholder (i) agrees to sell such Stockholder’s Registrable Securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to
approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements and the provisions of this Agreement in respect of registration rights.
Section 2.10. Other Indemnification. Indemnification similar to that specified herein (with appropriate modifications) shall be given by the Company and each Stockholder participating therein with respect to any required registration or other qualification of securities under any federal or state law or regulation or governmental authority other than the Securities Act.
Section 2.11. Cooperation by the Company. If any Stockholder shall transfer any Registrable Securities pursuant to Rule 144, the Company shall cooperate, to the extent commercially reasonable, with such Stockholder and shall provide to such Stockholder such information as such Stockholder shall reasonably request.
Section 2.12. No Transfer of Registration Rights. None of the rights of Stockholders under this Article 2 shall be assignable by any Stockholder to any Person acquiring Securities in any Public Offering or pursuant to Rule 144, except a transfer to an Affiliate of an Electrum Party or the MERS Party in accordance with Article 4 of the Shareholders Agreement or in connection with the transfer of all Common Stock held by the Electrum Parties or the MERS Party to a third party.
ARTICLE 3
MISCELLANEOUS
Section 3.01. Binding Effect; Assignability; Benefit.
(a) This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, successors, legal representatives and permitted assigns. Any Stockholder that ceases to own beneficially any Company Securities shall cease to be bound by the terms hereof (other than (i) the provisions of Sections 2.05, 2.06, 2.07, 2.08 and 2.10 applicable to such Stockholder with respect to any offering of Registrable Securities completed before the date such Stockholder ceased to own any Company Securities and (ii) Sections 3.02, 3.04, 3.05, 3.06 and 3.07).
(b) Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the parties hereto, and their respective heirs, successors, legal representatives and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.
Section 3.02. Notices. Unless otherwise specified herein, all notices, consents, approvals, reports, designations, requests, waivers, elections and other communications authorized or required to be given pursuant to this Agreement shall be in writing and shall be given, made or delivered (and shall be deemed to have been duly given, made or delivered upon receipt) by personal hand-delivery, by facsimile transmission, by electronic mail, by mailing the same in a sealed envelope, registered first-class mail, postage prepaid, return receipt requested, or by air courier guaranteeing overnight delivery, addressed to the Company, the Electrum Parties and the MERS Party at the address set forth below or to the applicable Stockholder at the address indicated on Annex A hereto (or at such other address for a Stockholder as shall be specified by like notice):
If to the Company, to:
Gatos Silver, Inc.
8400 E. Crescent Pkwy
Suite 600
Greenwood Village, CO 80111
Attention: Roger Johnson
Fax: (303) 784-5351
E-mail: roger.johnson@ssmines.com
with a copy to:
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, NY 10017
Attention: Richard D. Truesdell, Jr.
Facsimile No.: (212) 701-5674
E-mail: richard.truesdell@davispolk.com
with a copy to the Electrum Parties and the MERS Party at the address listed below.
If to the Electrum Parties, to:
Tigris Financial Group Ltd.
535 Madison Avenue, 12th Floor
New York, NY 10022
Attention: Andrew M. Shapiro
Fax: (646) 365-1637
Email: ashapiro@tigris.com
If to the MERS Party, to:
[Name]
[address]
Attention:
Fax:
[Email: ]
Any Person that becomes a Stockholder shall provide its address and fax number to the Company, which shall promptly provide such information to each other Stockholder.
Section 3.03. Waiver; Amendment; Termination.
(a) Subject to Section 3.03(b), no provision of this Agreement may be amended, waived or otherwise modified except by an instrument in writing executed by the Company with approval of the Board of Directors and Stockholders holding at least a majority of all Shares (as determined on a Common Equivalents and Fully-Diluted basis), held by the parties hereto at the time of such proposed amendment or modification. In addition, any party may waive any provision of this Agreement with
respect to itself by an instrument in writing executed by the party against whom the waiver is to be effective.
(b) In addition, any amendment, waiver or modification of any provision of this Agreement that would materially and adversely affect any Stockholder in a manner that is disparate from the manner in which it affects other Stockholders may be effected only with the consent of the Stockholder so affected.
Section 3.04. Governing Law. This Agreement is governed by and will be construed in accordance with the laws of the State of Delaware, excluding any conflict-of-laws rule or principle (whether of Delaware or any other jurisdiction) that might refer the governance or the construction of this Agreement to the law of another jurisdiction.
Section 3.05. Jurisdiction. Each of the parties (a) consents to submit itself to the personal jurisdiction of the Court of Chancery of the State of Delaware in the event any dispute arises out of this Agreement, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from such court and (c) agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than the Court of Chancery of the State of Delaware. Each Party hereby agrees that, to the fullest extent permitted by law, service of any process, summons, notice or document by U.S. registered mail to the respective addresses set forth in Section 3.02 shall be effective service of process for any suit or proceeding in connection with this Agreement.
Section 3.06. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF. The Company or any Stockholder may file an original counterpart or a copy of this Section 3.06 with any court as written evidence of the consent of any of the Parties to the waiver of their rights to trial by jury.
Section 3.07. Specific Performance. It is hereby agreed and acknowledged that it will be impossible to measure the money damages that would be suffered if the parties fail to comply with any of the obligations imposed on them by this Agreement and that, in the event of any such failure, an aggrieved party will be irreparably damaged and will not have an adequate remedy at law. Each party shall, therefore, be entitled (in addition to any other remedy to which such party may be entitled at law or in equity) to seek injunctive relief, including specific performance, to enforce such obligations, without the posting of any bond, and if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties shall raise the defense that there is an adequate remedy at law.
Section 3.08. Counterparts; Effectiveness. This Agreement may be executed in any number of separate counterparts each of which when so executed shall be deemed to be an original.
Section 3.09. Entire Agreement. This Agreement, the Stockholder Agreement and the Subscription Agreement constitute the entire agreement among the parties hereto and supersede all prior and contemporaneous agreements and understandings, both oral and written, among the parties hereto with respect to the subject matter hereof and thereof.
Section 3.10. Severability. In the event that any provision of this Agreement shall be invalid, illegal or unenforceable, such provision shall be construed by limiting it so as to be valid, legal and enforceable to the maximum extent provided by law and the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.
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THE COMPANY: |
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GATOS SILVER, INC. |
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THE ELECTRUM PARTIES: |
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ELECTRUM SILVER US LLC |
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ELECTRUM SILVER US II LLC |
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TIGRIS FINANCIAL GROUP LTD. |
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GRAT HOLDINGS LLC |
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MANUL CAPITAL MANAGEMENT LLC |
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THE MERS PARTY: |
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THE MUNICIPAL EMPLOYEES’ RETIREMENT SYSTEM OF MICHIGAN |
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Annex A
Other Stockholder Addresses