<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SUNSHINE MINING AND REFINING COMPANY
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the filing
fee is calculated and state how it was determined):
- - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - --------------------------------------------------------------------------------
(5) Total fee paid:
- - --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- - --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- - --------------------------------------------------------------------------------
(3) Filing Party:
- - --------------------------------------------------------------------------------
(4) Date Filed:
- - --------------------------------------------------------------------------------
<PAGE> 2
[Sunshine Mining & Refining Company Letterhead]
June 24, 1996
Dear Shareholder:
You are invited to attend the Annual Meeting of Shareholders of Sunshine
Mining and Refining Company (the Company), to be held at the Boise Centre on
the Grove (Salmon River Room), 850 Front Street, Boise, Idaho on Tuesday, July
30, 1996, at 10:00 A.M., local time.
The annual meeting will involve the election of seven directors and the
approval and adoption of the 1995 Employee Nonqualified Stock Option Plan. In
addition, reports of the Company's operations and other matters of interest
will be presented at the meeting. Your Board of Directors recommends that you
vote to elect the directors nominated, vote to approve the 1995 Plan, and
attend the meeting, if possible.
As a result of the recently completed transaction that converted all of the
Company's previously outstanding preferred stock into common stock and
warrants, the number of directors has been reduced to seven from ten.
I would like to thank Messrs. Hoffer Kaback and Douglas K. Stewart, who
were elected directors by the holders of preferred stock in 1994 and 1995.
They served the Company and its stockholders well during their tenure, which
ended on May 22, 1996.
I am saddened to report to you on the passing of Fred C. Humphreys on May
9, 1996. Fred was a Director since May, 1981, and his insight and analysis
will be sorely missed. On behalf of his fellow shareholders, Board members and
the Company, we extend our condolences to his wife and family.
Very truly yours,
John S. Simko
JSS:rs
<PAGE> 3
SUNSHINE MINING AND REFINING COMPANY
877 West Main Street, Suite 600
Boise, Idaho 83702
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 30, 1996
The 1996 Annual Meeting of Stockholders of Sunshine Mining and Refining
Company, a Delaware corporation (the "Company") will be held on July 30, 1996,
at 10:00 a.m., local time, at the Boise Centre on the Grove (Salmon River
Room), 850 Front Street, Boise, Idaho for the following purposes:
1. the election of seven (7) members of the Board of Directors of the Company
to serve until the next annual meeting of stockholders or until their
respective successors are elected and qualified; and
2. the approval and adoption of the 1995 Employee Nonqualified Stock Option
Plan; and
3. to transact such other business as may properly come before the meeting or
any adjournment(s) thereof.
Holders of Common Stock of record at the close of business on June 20,
1996, will be entitled to notice of and to vote at the Meeting. A list of
these stockholders will be available for inspection for ten (10) days preceding
the meeting at the office of the Secretary of the Company, 877 West Main
Street, Suite 600, Boise, Idaho 83702, and at the meeting itself.
Whether or not you plan to attend the Meeting, please date and sign the
enclosed proxy card and return it in the accompanying envelope, which requires
no postage if mailed in the United States. If you attend the meeting in
person, you may withdraw your proxy and vote your shares.
By Order of the Board of Directors
Rebecca L. Saunders
Secretary
June 24, 1996
<PAGE> 4
SUNSHINE MINING AND REFINING COMPANY
877 West Main Street, Suite 600
Boise, Idaho 83702
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
Tuesday, July 30, 1996
GENERAL INFORMATION
This Proxy Statement and the form of proxy are being mailed to
stockholders on or about June 24, 1996, in connection with the solicitation of
proxies by Sunshine Mining and Refining Company (the "Company") for use at the
1996 Annual Meeting of Stockholders (the "Annual Meeting") to be held at 10:00
a.m., local time, on July 30, 1996, at the Boise Centre on the Grove, 850 Front
Street, Boise, Idaho, and at any adjournment or adjournments thereof. The
Company held its last annual meeting on June 13, 1995.
A PROPERLY EXECUTED PROXY WILL BE VOTED IN ACCORDANCE WITH ITS TERMS.
UNLESS OTHERWISE INDICATED, THE PROXY CARDS WILL BE VOTED FOR THE ELECTION OF
DIRECTORS TO SERVE AS INDICATED, FOR THE APPROVAL OF THE COMPANY'S 1995
EMPLOYEE NONQUALIFIED STOCK OPTION PLAN AND FOR ALL OTHER PROPOSALS TO BE VOTED
ON AT THE MEETING. A PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS VOTED.
VOTING SECURITIES AND RECORD DATE
The Common Stock, par value $.01 (the "Common Stock") constitutes the only
class of the Company's capital stock entitled to vote at the Annual Meeting.
The close of business on June 20, 1996, has been fixed as the record date
(the "Record Date") for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting. At the Record Date, depending on elections
by former Preferred stockholders to receive either 6.9 shares of Common Stock,
or 6 shares of Common Stock and two warrants to purchase Common Stock, in
exchange for each share of Preferred Stock held by such holder, from
236,148,508 to 239,154,833 shares of Common Stock were outstanding and entitled
to vote. Each stockholder is entitled to one vote for each share of Common
Stock held on the Record Date. Unless otherwise indicated, all information
herein concerning ownership of the Company's securities is as of the Record
Date.
The presence, in person or by proxy, of the holders of a majority of the
Company's Common Stock issued and outstanding as of the Record Date and
entitled to vote will constitute a quorum at the Annual Meeting and any
adjournment(s) thereof. Provided a quorum is present, the favorable vote of
the holders of a majority of the shares of Common Stock represented at the
Annual Meeting is required for the election of the directors and for the
approval and adoption of the 1995 Employee Nonqualified Stock Option Plan.
Holders of the Company's Common Stock have no appraisal or similar rights with
respect to any of the matters being voted on at the Annual Meeting.
With regard to the election of directors, votes may be cast in favor or
withheld; votes that are withheld will be excluded entirely from the vote and
will have no effect. Abstentions may be specified on the proposal for adoption
of the 1995 Employee Nonqualified Stock Option Plan (but not on the election of
directors) and will be counted as present for purposes of that proposal. Under
the rules of the New York Stock Exchange, Inc., brokers who hold shares in
street name for customers have the authority to vote on certain items when they
have not received instructions from beneficial owners. Brokers that do not
receive instructions are entitled to vote on the election of directors and on
the approval and adoption of the 1995 Employee Nonqualified Stock Option Plan.
Under applicable Delaware law, a broker non-vote will have no effect on the
outcome of the election of directors or on the approval and adoption of the
1995 Employee Nonqualified Stock Option Plan.
1
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
To the knowledge of the Company, no person owns five percent (5%) or more
of the Company's Common Stock.
The following table presents certain information regarding the number of
shares of Common Stock beneficially owned by each director, nominee, Named
Executive Officer, and by all directors and officers as a group as of June 20,
1996. All individuals have sole voting and investment power with respect to
the shares owned, except as otherwise indicated.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME OF INDIVIDUAL TITLE OF CLASS BENEFICIAL OWNERSHIP OF CLASS
------------------ -------------- -------------------- --------
<S> <C> <C> <C>
G. Chris Andersen Common Stock 30,517 (1) (3)
V. Dale Babbitt Common Stock 15,264 (1) (3)
George M. Elvin Common Stock 316,713 (1)(2) (3)
Daniel D. Jackson Common Stock 19,927 (1) (3)
John S. Simko Common Stock 267,842 (1) (3)
Robert B. Smith. Jr. Common Stock 148,000 (1) (3)
Oren G. Shaffer Common Stock 22,625 (1) (3)
William W. Davis Common Stock 249,838 (1) (3)
Robert H. Peterson Common Stock 144,559 (1) (3)
Harry F. Cougher Common Stock 209,425 (1) (3)
All officers
and directors as a group Common Stock 1,424,710 (4) (3)
- - ----------------
</TABLE>
(1) Includes the following shares subject to purchase pursuant to stock options
and warrants exercisable within sixty days: Mr. Andersen, 10,589 shares; Mr.
Babbitt, 11,088 shares; Mr. Cougher, 200,300 shares; Mr. Davis, 201,218
shares; Mr. Elvin, 5,000 shares; Mr. Jackson, 18,809 shares; Mr. Peterson,
125,750 shares; Mr. Simko, 216,873 shares; Mr. Shaffer, 10,875 shares; and
Mr. Smith, 10,000 shares.
(2) Includes 173,913 shares that may be acquired upon the exchange of the
Company's 8% Senior Exchangeable Notes ("8% Notes"), 17,800 shares owned by
Mr. Elvin's wife and 120,000 shares owned by a partnership in which Mr.
Elvin shares investment and voting powers.
(3) Less than 1%.
(4) Includes 810,502 shares subject to purchase pursuant to stock options and
warrants exercisable within 60 days and 173,913 shares acquirable upon the
exchange of 8% Notes.
To the Company's knowledge, based solely on its review of Forms 3, 4 and 5,
and amendments thereto, furnished to the Company for the fiscal year ended
December 31, 1995 and written representations that no other reports were
required for the fiscal year ended December 31, 1995, all Section 16(a) filing
requirements applicable to its officers and directors were complied with.
2
<PAGE> 6
ELECTION OF DIRECTORS
The Board of Directors proposes the election of seven (7) directors to be
elected by the holders of Common Stock. Each of such nominees is presently a
director of the Company.
Unless otherwise indicated, a properly executed proxy card will be voted
FOR the seven nominees named immediately below. In case any of such
individuals named below is unable to serve for any reason (which is not now
anticipated), the proxies represented by such proxy cards may be voted for the
election of other persons selected by the Board of Directors.
<TABLE>
<CAPTION>
POSITION(S) WITH COMPANY, PRINCIPAL OCCUPATION
NAME AGE AND BUSINESS HISTORIES
---- --- ----------------------------------------------------------------
<S> <C> <C>
G. Chris Andersen . . 58 Director since May 1983; since January 1996, Partner of Andersen, Weinroth & Co.;
until August 1995, was Vice Chairman -- PaineWebber Incorporated for more than five years
prior thereto.
V. Dale Babbitt . . . 59 Director since December 1992; President (for more than the past five years) and
CEO of N.L. Terteling Family Interests, Inc. (dba) J.A. Terteling & Sons Co., the Managing
General Partner for investments consisting of mining interests, oil & gas, real estate and
securities.
George M. Elvin . . . 54 Director since June 1994. Financial Consultant (for more than the past five years)
and since August 1992 is the owner and President of Windsor IBC, Inc. a brokerage firm
member of the NASD.
Daniel D. Jackson . . 68 Director since May 1983; Managing or Advisory Director of Hambrecht & Quist, Inc.,
a San Francisco, California based investment banking firm since February 1990.
Oren G. Shaffer . . . 53 Director since June 1993. Since October 1994, Executive Vice-President and Chief
Financial Officer of Ameritech; previously was President of Vigrocap, a venture capital
company (October 1991 to October 1994); and was Executive Vice President, Chief Financial
Officer and Director of Goodyear Tire and Rubber Co. from January, 1990 to October 1992.
John S. Simko . . . . 57 Director and President since October 1992, and Chief Executive Officer of the
Company since December, 1992; previously (since 1984) served the Company as Senior Vice
President and General Counsel.
Robert B. Smith, Jr . 59 Director since June 1993. Mr. Smith has been a private investor since 1984 and
Trustee of the Dalkon Shield Trust since 1989.
</TABLE>
Each Director elected at the Annual Meeting holds office until the
next annual meeting of stockholders or until his successor is duly elected and
qualified.
CERTAIN OTHER MATTERS
No family relationships exist between any director, executive officer
or person nominated or chosen by the Company to become a director or executive
officer.
3
<PAGE> 7
Mr. Andersen is a director of Terex Corporation and AFGL
International, Inc.; Mr. Jackson is a director of InfoVest Corporation; Mr.
Shaffer is a director of Taiwan Equity Fund, Inc.; and Mr. Smith is a director
of Securacom Corp. Each of these companies has a class of securities
registered pursuant to Section 12 of the Securities Exchange Act of 1934.
MEETINGS AND COMMITTEES
The Board of Directors of the Company held four (4) meetings during 1995.
The standing committees of the Board of Directors of the Company are
the Audit Committee, the Compensation and Transaction Committee, and the
Finance Committee.
The Audit Committee has the authority to recommend to the Board of
Directors the independent accountants to perform the annual audit of the
Company; to review the performance of such auditors; to develop the general
policies and procedures used by the Company with respect to internal auditing,
accounting and financial controls; and to provide the independent auditors with
access to the Board of Directors. In 1995, Committee members were Fred C.
Humphreys (Chairman), Robert B. Smith, Jr. and Douglas K. Stewart. One
meeting of the Audit Committee was held during 1995.
The Compensation and Transaction Committee has the authority to
establish all compensation, including salaries, bonuses and the terms and
conditions of the same for all executive officers of the Company; to administer
the stock option plans and determine the individuals to receive, and the
amount, times, and granting of stock options; to establish the terms and
conditions of any employment contract executed between the Company and its
officers; and to establish insurance, pension, retirement and other benefits
for officers of the Company. The Compensation and Transaction Committee also
reviews transactions between the Company and directors, officers or employees
of the Company that exceed $50,000. The Compensation and Transaction Committee
also recommends persons to serve as directors and officers of the Company. If
nominees to the Board of Directors are recommended by stockholders, these
recommendations will be considered by the Compensation and Transaction
Committee. Recommendations by stockholders should be submitted to the
Secretary of the Company and should identify the recommended nominee by name
and provide detailed background information. In 1995, Committee members were
Daniel D. Jackson (Chairman), V. Dale Babbitt and Hoffer Kaback. One meeting of
the Compensation and Transaction Committee was held during 1995.
The Finance Committee has the authority to review all proposed changes
to the capital structure of the Company and to make all decisions concerning
investments of funds by the Company. In 1995, Committee members were G. Chris
Andersen (Chairman), Oren G. Shaffer and George M. Elvin. One meeting of the
Finance Committee was held during 1995.
All members of the Board of Directors attended at least 75 percent of
the total number of meetings of the Board and all committees on which they
served.
MANAGEMENT REMUNERATION AND TRANSACTIONS
COMPENSATION OF EXECUTIVE OFFICERS
The following are the executive officers of the Company:
<TABLE>
<CAPTION>
POSITION(S) WITH COMPANY, PRINCIPAL OCCUPATION
NAME AGE AND BUSINESS HISTORIES
---- --- -----------------------------------------------------------------
<S> <C>
John S. Simko 57 Director and President since October 1992, and Chief Executive Officer of the
Company since December 1992; previously (since 1984) served the Company as Senior Vice
President and General Counsel.
</TABLE>
4
<PAGE> 8
<TABLE>
<S> <C> <C>
William W. Davis 43 Executive Vice President and Chief Financial Officer since December, 1995, and
Senior Vice President and Chief Financial Officer of the Company since September 1992.
Previously (since 1983) served in various capacities as an employee of the Company.
Robert H. Peterson 59 Senior Vice President and Chief Operating Officer-Refining of the Company since
September 1992. Previously (since 1980) served in various capacities as an employee of the
Company.
Harry F. Cougher 53 Senior Vice President and Chief Operating Officer-Mining since January 1994. Previously
(since 1984) served in various capacities as an employee of the Company.
</TABLE>
The following table sets forth the compensation paid by the Company,
as well as certain other compensation paid to or accrued for the account of
each of the four most highly compensated executive officers of the Company,
including the Chief Executive Officer, for calendar years 1995, 1994, and 1993,
or for each year in which such person served as an executive officer of the
Company. There were no other executive officers whose salary and bonus for the
year ended December 31, 1995, exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------- ------------- ---------
SECURITIES
UNDERLYING LTIP ALL OTHER
SALARY BONUS OPTIONS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($) ($) (3)
- - ---------------------------- ---- ------- ------ ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
John S. Simko, 1995 297,832 0 100,000 0 15,525
CEO and President 1994 271,527 0 65,000 0 14,370
1993 258,086 38,727(1) 50,000 52,500 (4) 11,103
William W. Davis, 1995 177,650 0 100,000 0 15,525
Exec. Vice Pres. & Chief 1994 166,096 25,000(2) 50,000 0 14,370
Financial Officer 1993 161,260 24,406(1) 50,000 0 4,308
Robert H. Peterson, 1995 182,348 0 75,000 0 15,525
Sr. Vice Pres. & Chief 1994 169,861 0 0 0 14,250
Operating Officer-Refining 1993 162,586 24,163(1) 50,000 0 4,497
Harry F. Cougher 1995 114,354 0 100,000 0 11,765
Sr. Vice Pres. & 1994 100,677 0 50,000 0 8,925
Chief Operating Officer-Mining
- - ----------------
</TABLE>
(1) Consists of stock bonuses awarded to Messrs. Simko, Davis and Peterson
valued at $38,727, $24,406, and $24,163 respectively. Stock distributed
was adjusted to account for estimated taxes, resulting in net stock
issuance of 13,676 shares, 9,752 shares, and 8,533 shares to Messrs. Simko,
Davis and Peterson respectively. The sale of these shares was restricted
until June 16, 1994.
(2) Cash bonus paid to Mr. Davis in December, 1994.
(3) Includes income received pursuant to the Company's Employees Savings and
Security Plan (the "Savings Plan") in which all employees of the Company,
other than those covered by a collective bargaining agreement, may
participate, and the Sunshine Defined Contribution Plan (the "DC Plan").
Payments to Mr. Simko under the Savings Plan were $4,500, $4,620 and
$4,497, in 1995, 1994 and 1993, respectively;
5
<PAGE> 9
payment to Mr. Simko under the DC Plan was $11,025 and $9,750 in 1995 and
1994, respectively. In 1993, Mr. Simko received reimbursement for moving
expenses, pursuant to Company policy, of $6,606. Payments to Mr. Davis under
the Savings Plan were $4,500, $4,620 and $4,308, in 1995, 1994 and 1993,
respectively; payment to Mr. Davis under the DC Plan was $11,025 and $9,750 in
1995 and 1994, respectively. Payments to Mr. Peterson under the Savings Plan
were $4,500, $4,500 and $4,497 in 1995, 1994 and 1993, respectively; payment to
Mr. Peterson under the DC Plan was $11,025 and $9,750 in 1995 and 1994,
respectively. Payments to Mr. Cougher under the Savings Plan were $3,360 and
$2,945 for 1995 and 1994, respectively; payments to Mr. Cougher under the DC
Plan were $5,980 and $8,405 for 1995 and 1994, respectively. The Savings Plan
is an individual account plan which provides for deferred compensation as
described in Section 401(k) of the Internal Revenue Code and is subject to and
complies with all of the principal protective provisions of Titles I and II of
the Employee Retirement Income Security Act of 1974 ("ERISA"). The DC Plan
replaced the Company's Defined Benefit Pension Plan as of January 1, 1994, and
is subject to and complies with ERISA.
(4) Payments received by Mr. Simko as a result of the termination of the
Deferred Performance Incentive Compensation Plan in 1993.
OPTIONS GRANTS IN 1995
Incentive stock options were granted to executive officers in the year
ended December 31, 1995, as follows:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS(2) OPTION TERMS
-------------------------------------- -----------------------
% OF TOTAL
OPTIONS
NUMBER OF SECURITIES GRANTED TO EXERCISE OR
UNDERLYING OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED FISCAL YEAR ($/SH)(1) DATE 5%($) 10%($)
---- ----------------------- ------------ ----------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
John Simko, CEO ..... 100,000 shares - Common 8.9 1.50 12/07/05 $94,334 $239,061
William W. Davis ..... 100,000 shares - Common 8.9 1.50 12/07/05 $94,334 $239,061
Harry F. Cougher ..... 100,000 shares - Common 8.9 1.50 12/07/05 $94,334 $239,061
Robert H. Peterson ... 75,000 shares - Common 6.7 1.50 12/07/05 $70,751 $179,296
- - ---------------
</TABLE>
(1) The options are exercisable on or after December 7, 1995.
(2) Subject to stockholder approval of the 1995 Employee Nonqualified Stock
Option Plan (the "1995 Plan") the Board of Directors granted 750,000,
500,000, 200,000, and 100,000 options to Messrs. Simko, Davis, Cougher
and Peterson, respectively, representing 20.6, 13.8, 5.5, and 2.8
percent, respectively, of the Total Options Granted to Employees in the
Fiscal Year ended December 31, 1995. If the proposal to adopt the 1995
Plan is approved, the grants reflected in the table will become null and
void and will be replaced by the above-identified grants under the 1995
Plan. The grants under the 1995 Plan have an exercise price of $1.50,
expire December 7, 2005 and are exercisable after shareholder approval.
If the 1995 Plan is approved, the potential realizable value assuming 5%
stock price appreciation would be $707,505, $471,670, $188,668 and
$94,334 for Messrs. Simko, Davis, Cougher and Peterson, respectively.
Assuming 10% stock price appreciation, the potential realizable value
would be
6
<PAGE> 10
$1,792,958, $1,195,305, $478,122 and $239,061 for Messrs. Simko, Davis,
Cougher and Peterson, respectively. See "PROPOSAL TO ADOPT THE 1995
EMPLOYEE NONQUALIFIED STOCK OPTION PLAN."
AGGREGATE OPTION EXERCISES AND FISCAL YEAR-END VALUE TABLE
The following table provides information on option exercises in fiscal
1995 by the Named Executive Officers and the value of such officers'
unexercised options at December 31, 1995.
<TABLE>
<CAPTION>
SHARES VALUE NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED ON REALIZED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
EXERCISE ($) OPTIONS AT FY-END AT FY-END ($)
-------- -------- ---------------------------- -------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
John S. Simko, CEO . 0 0 215,000 0 0 0
William W. Davis . . 0 0 200,000 0 0 0
Robert H. Peterson . 0 0 125,000 0 0 0
Harry F. Cougher . . 0 0 200,000 0 0 0
</TABLE>
PENSION PLANS
On December 31, 1993, the Company froze its Defined Benefit Pension Plan
(the "Pension Plan"), which was replaced as of January 1, 1994, by the
Company's DC Plan. The Pension Plan was maintained for the benefit of
employees, except those covered by a collective bargaining agreement. The
following table shows the estimated annual benefits payable under the Pension
Plan as in effect on December 31, 1993; after that date benefits ceased to
accrue under the Pension Plan. The examples assume retirement at normal
retirement age of 65 after assumed periods of service, and a fixed level of
social security benefits.
RETIREMENT BENEFIT AT AGE 65
YEARS OF SERVICE
<TABLE>
<CAPTION>
REMUNERATION 5 10 15 20 25 30
------------ ------- ------- ------- ------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
75,000 $6,000 $12,000 $18,500 $24,000 $30,000 $36,500
100,000 8,000 16,000 25,000 33,000 41,000 49,000
150,000 13,000 25,000 38,000 51,000 64,000 76,000
200,000 17,000 34,000 52,000 69,000 86,000 103,000
250,000 22,000 43,000 65,000 87,000 109,000 115,641
300,000 26,000 52,000 79,000 105,000 115,641 115,641
350,000 31,000 61,000 92,000 115,641 115,641 115,641
</TABLE>
The years of credited service at December 31, 1993, for Mr. Simko was
nine years; for Mr. Davis was ten years; for Mr. Peterson was thirteen years;
and for Mr. Cougher was nine years. Pursuant to the early retirement program,
employees who are age 55 and who have fifteen years of employment with the
Company are eligible for early retirement, and will receive approximately 75%
of the accrued benefits they would have received at age 65. Mr. Simko's
employment contract provides that he shall be eligible for early retirement
notwithstanding that he will have less than fifteen years of service with the
Company upon expiration of his employment contract. See "EMPLOYMENT
AGREEMENTS".
COMPENSATION OF DIRECTORS
Directors of the Company who are not employees receive an annual retainer
of 3,350 troy ounces of silver or 50 troy ounces of gold, in addition to 235
troy ounces of silver or 3.5 troy ounces of gold per day for each Board or
committee meeting attended. During 1995, non-employee directors received gold
valued as follows: Messrs. Andersen ($23,314.70), Babbitt ($26,019.15),
Humphreys ($24,663.95), Jackson ($26,019.15), Shaffer ($21,979.45), Smith
($24,663.95), Stewart ($26,013.20), Elvin ($24,663.95), and Kaback
($26,019.15). In addition, pursuant to the 1987 Employee Non-Qualified Stock
Option Plan ("the 1987 Plan"), all non-employee
7
<PAGE> 11
directors automatically receive an option for 5,000 shares of Common Stock on
August 30 of each year during the term of the 1987 Plan.
EMPLOYMENT AGREEMENTS
Effective January 1, 1994, Mr. Simko, Mr. Davis, Mr. Peterson and Mr.
Cougher entered into written employment agreements (the "Employment
Agreements") with the Company. Each of the Employment Agreements is for a term
of three years. In 1995, the Employment Agreements for Messrs. Simko, Davis and
Cougher were amended to extend the term of each agreement for an additional
three years to December 31, 1999.
Pursuant to the Employment Agreements, Messrs. Simko, Davis, Peterson,
and Cougher (collectively the "Contracting Employees") are to receive annual
base compensation of $250,000, $160,000, $156,000 and $92,000, respectively,
which may be increased by the Board of Directors. In the event of the
disability or death of a Contracting Employee, the Employment Agreement
provides for the continued payment of the base compensation for the remaining
term of the agreement, subject to reduction for disability payments separately
provided by the Company. In addition, the Contracting Employees may receive
such annual incentive compensation based on the performance of the Company or
other criteria as may be awarded in the discretion of the Board of Directors,
and will participate in any employee benefit plan, employee welfare plan,
deferred compensation plan, stock option plan, or any other plan or arrangement
of the Company now or hereafter adopted for the benefit of officers or
employees generally. In addition, Mr. Simko's agreement provides that he is
deemed to have qualified for early retirement under the Company's Pension Plan,
notwithstanding that at the expiration of the agreement (prior to the 1995
extension) he shall have less than 15 years of service with the Company.
Pursuant to the Employment Agreements, the Company will indemnify each
Contracting Employee in the event that he is made, or threatened to be made, a
party to any action or proceeding, including any action by or in the right of
the Company by reason of the provision of services by him to the Company.
Claims or controversies arising under the Employment Agreement will be resolved
through arbitration, and all resulting legal and accounting fees and other
expenses will be paid by the Company.
Pursuant to the Employment Agreements, a Contracting Employee's
employment may be terminated by mutual agreement between the Contracting
Employee and the Company, by death, or for cause.
COMPENSATION AND TRANSACTION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
The following non-employee directors served on the Compensation and
Transaction Committee (the Committee) of the Company's Board of Directors
during the last fiscal year: Daniel D. Jackson (Chairman), V. Dale Babbitt and
Hoffer Kaback. There are no compensation committee interlocks.
COMPENSATION AND TRANSACTION COMMITTEE REPORT
The Committee is responsible for reviewing executive compensation and
recommending appropriate changes to the Board of Directors to retain key
executives and to reward performance that benefits the Company's stockholders.
The Board annually approves increases in base salaries and awards of incentive
compensation, if any, for any executive or employee whose overall compensation
would exceed $100,000.
The Committee believes in compensating executives based on business
performance and their respective contributions. However, the Committee also
recognizes the pressure on cash costs, including salaries, created by the
prolonged slump in silver prices. The Company's executive compensation in
general is lower than the mining industry, particularly Hecla Mining Company
and Coeur d'Alene Mines Corporation (the "Peer Companies").
The Committee annually reviews base salaries and performance and
recommended changes are presented to the full Board. The Committee also reviews
the appropriateness of alternative pay systems to reward performance,
8
<PAGE> 12
maintain competitiveness and align the executives' interest with those of the
stockholders, including cash bonuses, stock bonuses, stock grants, stock
options or other forms of compensation.
Recent changes to the Internal Revenue Code have been made relating to
the disallowance of deduction for remuneration to certain executive officers in
excess of $1,000,000. The compensation paid to the Company's executives is
less than this limit, and will be fully deductible.
Several key objectives were established for executive officers in 1995.
They were stated in a general, rather than quantitative, manner because
fluctuating precious metals markets and the uncertainty of exploration results
complicate quantification efforts. Because each of the key objectives could
contribute to the profitability of the Company and the increase in shareholder
worth, each objective was given relatively equal consideration by the
Committee.
The key objectives were stated as follows:
(1) Continue strengthening the Company's balance sheet and financial
condition;
(2) Return to profitability;
(3) Reduce cash production cost per ounce of silver at the Sunshine Mine;
(4) Explore for new high-grade ore bodies in the Sunshine Mine;
(5) Expand exploration focus to new domestic and international projects
that would make a meaningful impact on the Company's near-term cash
flow; and
(6) Increase shareholder worth.
The prolonged slump in silver prices continued in 1995. This hampered
efforts to return to profitability and negatively impacted the Common Stock
price. Cash production costs per ounce of silver rose in 1995 primarily due to
a decline in silver production, as the focus at the Sunshine Mine was on
exploration and development of the West Chance. Progress was made in other
categories, including: continued encouraging results from exploration efforts
in the Sunshine Mine; the successful testing of a trackless mining method in
the Sunshine Mine with which certain ore reserves can be accessed more quickly
and at lower costs; the acquisition of Pirquitas in Argentina; establishing an
office in Mendoza, Argentina from which additional exploration opportunities
have been identified; and the agreement with the largest Preferred shareholders
to eliminate the Company's outstanding Preferred Stock which improved the book
value per Common share, and eliminated the annual charge for Preferred dividend
requirements.
No bonus awards or increase in base salary were awarded any officers in
1995 except for Mr. Davis. In recognition of his increased responsibilities
for domestic and international operations of the Company, the Committee
recommended, and the Board approved, the appointment of Mr. Davis as Executive
Vice President and Chief Financial Officer with a 13.6% increase in base
salary. The Committee recommended, and the Board approved, the granting of
stock options to Messrs. Davis, Peterson and Cougher.
In late 1992, the Board selected John S. Simko as President and Chief
Executive Officer because of his broad knowledge of the mining industry,
corporate law, environmental regulations and financing. In December, 1995, the
Committee recommended, and the Board approved, a three year contract extension.
His overall compensation remains below similar positions in the Peer Companies.
The Committee did not recommend an increase in base salary or a bonus award to
Mr. Simko in 1995. Due to the progress made in exploration and operational
outlook at the Sunshine Mine, the Pirquitas acquisition, and the elimination of
the Preferred Stock, the Committee recommended, and the Board approved, the
granting of stock options to Mr. Simko in December.
Daniel D. Jackson
V. Dale Babbitt
Hoffer Kaback
9
<PAGE> 13
PERFORMANCE GRAPH
The accompanying chart compares the returns on investments since December
31, 1990, on the Standard and Poors 500, industry peer group, and the Company's
Common Stock. The comparable company index includes the Company, Hecla Mining
Company and Coeur d'Alene Mines Corporation.
[GRAPH]
COMPANY NAME / INDEX DEC90 DEC91 DEC92 DEC93 DEC94 DEC95 MAR96
================================================================================
SUNSHINE MINING & REFINING 100 70.00 37.52 210.00 136.46 104.97 125.96
S & P 500 INDEX 100 130.47 140.41 154.56 156.60 215.45 227.01
PEER GROUP 100 99.52 71.51 157.71 119.60 95.24 110.81
10
<PAGE> 14
THE PROPOSAL TO ADOPT THE 1995 EMPLOYEE NONQUALIFIED STOCK OPTION PLAN
GENERAL
On December 7, 1995, the Board of Directors approved and adopted the 1995
Nonqualified Stock Option Plan (the "1995 Plan"), subject to approval by the
stockholders of the Company. The 1995 Plan provides for the granting, from
time to time, to key employees and directors of the Company and its
subsidiaries of options to purchase up to an aggregate of 10,000,000 shares of
Common Stock. At the Annual Meeting, stockholders of the Company will be
requested to consider and vote upon the 1995 Plan.
REASONS FOR ADOPTION OF THE 1995 PLAN
The Company has recognized the importance of attracting and retaining
employees with the requisite degree of training, experience and ability, and of
stimulating the active interest of these persons in the development and
financial success of the Company. Accordingly, the Company adopted with
stockholder approval the 1993 Incentive Stock Option Plan and the 1987
Nonqualified Plan. See "Management Remuneration and Transactions." The Board
of Directors believes that these existing stock option plans have successfully
encouraged the sense of proprietorship, and have stimulated the active interest
in the Company of persons whose services are particularly valuable to the
Company.
The 1987 Nonqualified Plan expires in 1997. As of the date hereof, only
61,500 options under the 1987 Nonqualified Plan and 326,500 options under the
1993 Plan could be granted. The Company felt it would be more advisable to
adopt a new plan expiring at a later date rather than to merely increase the
number of options subject to grant under the 1987 Nonqualified Plan.
In the opinion of the Board of Directors, stock options granted on proper
terms continue to be essential in attracting and motivating key personnel, and
the interests of the Company and its stockholders will be advanced thereby.
Substantially all of the options available under the prior plans have been
granted, and the proposed 1995 Plan is intended to continue to provide the
incentive of stock options to employees whose services are considered
particularly valuable to the Company.
DESCRIPTION OF THE 1995 PLAN
The 1995 Plan provides for the granting from time to time of options to
purchase shares of Common Stock to key employees or potential key employees of
the Company and its subsidiaries, and provides that all non-employee directors
automatically receive an option for 25,000 shares of Common Stock on August 30
of each year during the term of the 1995 Plan.
The foregoing summary of the 1995 Plan is qualified in its entirety by
the terms of the 1995 Plan, a copy of which is attached as Appendix A and is
incorporated herein by reference.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Under the Code, the holder of a nonqualified option does not recognize
taxable income as a result of the grant of the option. The option holder
recognizes ordinary income upon exercise in an amount equal to the difference
between the fair market value of the shares on the date of exercise and the
exercise price. The Company may deduct that amount for federal income tax
purposes in the year the option is exercised. The tax basis of shares
purchased by the option holder will generally be equal to the sum of the
exercise price and the amount included in the gross income of the option holder
as a result of the exercise of the option. The amount of any gain or loss
realized on a subsequent sale of the stock will be calculated by reference to
the tax basis.
Any changes in the law with respect to the tax treatment of options are
beyond the control of the Company and the stockholders and are not subject to
stockholder approval. The foregoing summary of federal income tax
11
<PAGE> 15
aspects with respect to the 1995 Plan is based upon existing law,
interpretations, regulations and rulings, which are subject to change.
NEW PLAN BENEFITS
Subject to shareholder approval of the 1995 Plan, the Board of Directors
granted the following options on December 7, 1995:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------
NUMBER OF SECURITIES EXERCISE OR RECENT MARKET
UNDERLYING OPTIONS BASE PRICE EXPIRATION VALUE OF
NAME GRANTED ($/SH)(1) DATE COMMON STOCK (2)
---- ------------------------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
John Simko, CEO . . . . . . . . 750,000 shares - Common 1.50 12/07/05 $1.375
William W. Davis . . . . . . . . 500,000 shares - Common 1.50 12/07/05 $1.375
Harry F. Cougher . . . . . . . . 200,000 shares - Common 1.50 12/07/05 $1.375
Robert H. Peterson . . . . . . . 100,000 shares - Common 1.50 12/07/05 $1.375
All current executive
officers . . . . . . . . . . 1,550,000 shares - Common 1.50 12/07/05 $1.375
All non-executive directors . . 510,000 shares - Common 1.50 12/07/05 $1.375
All non-executive
officer employees . . . . . 1,100,000 shares - Common 1.50 12/07/05 $1.375
- - ---------------
</TABLE>
(1) The options are exercisable at any time.
(2) The NYSE closing per share sale price of the Common Stock on June 18,
1996.
It cannot be determined at this time what benefits, if any, will be received by
any person or group of persons under the 1995 Plan if it is adopted. Had the
1995 Plan been in effect during the last fiscal year, the options granted on
December 7, 1995, would not be "In-the-Money Options" at year-end based on the
$1.25 year end NYSE closing per share sale price of the Common Stock.
VOTE REQUIRED
The affirmative vote of a majority of shares of Common Stock present and
voting at the Annual Meeting is required to approve the 1995 Plan, provided a
quorum is present. THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY
RECOMMENDS A VOTE FOR APPROVAL OF THE 1995 PLAN.
12
<PAGE> 16
INDEPENDENT ACCOUNTANTS
The Company's Board of Directors has appointed Ernst & Young LLP to serve
as the Company's independent public accountants for the current fiscal year. A
representative of Ernst & Young LLP will be present at the Annual Meeting to
answer any questions concerning the Company's financial statements and to make
a statement if he desires to do so.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1997 Annual
Meeting of Stockholders must be received by the Company at its principal
executive offices by February 25, 1997, for inclusion in the proxy statement
and proxy relating to that meeting.
OTHER MATTERS
At the date of this Proxy Statement, the Board of Directors knows of no
other matters which will be presented for consideration at the Annual Meeting.
If any such other matters are properly presented for action at the Annual
Meeting, it is the intention of the persons named in the accompanying form of
proxy to vote the shares represented by the proxy in accordance with their
judgment on such matters.
All expenses in connection with this solicitation of proxies will be
borne by the Company. In addition to solicitation by mail, directors, officers
and regular employees of the Company may solicit proxies by telephone,
telegram, mail or in person. The Company may also reimburse brokers and other
custodians, nominees and fiduciaries holding shares in their names, for their
reasonable expenses in sending material to the beneficial owners of shares and
obtaining their proxies.
Copies of the Company's annual report on Form 10-K for the year ended
December 31, 1995, may be obtained without charge by writing to the Company at
877 West Main Street, Suite 600, Boise, Idaho 83702, Attn: Rebecca L.
Saunders, Secretary, or by telephone request to (208) 345-0660.
SUNSHINE MINING AND REFINING COMPANY
June 24, 1996
13
<PAGE> 17
APPENDIX A
1995
EMPLOYEE NONQUALIFIED STOCK OPTION PLAN OF
SUNSHINE MINING & REFINING COMPANY
1. PURPOSE.
This 1995 Employee Nonqualified Stock Option Plan (the "Plan") is
intended as an employment incentive; to encourage stock ownership by key
employees or individuals who may become key employees of Sunshine Mining &
Refining Company (the "Corporation") and its Subsidiaries in order to increase
their proprietary interest in the Corporation's success and to encourage stock
ownership by Directors who are not employees by providing such Directors with
an incentive to serve the Corporation by an annual grant of options. Options
granted under the Plan are not intended to qualify as "Qualified Stock Options"
under the Internal Revenue Code of 1986, as amended.
2. ELIGIBILITY.
The individuals who shall be eligible to participate in the Plan shall
be key or potential key employees of the Corporation or of its Subsidiaries.
Such key or potential key employees shall be (or expect to become) personnel of
the Corporation or of any Subsidiary who have or will have responsibility for
the management, direction and financial success of the Corporation. More than
one option may be granted from time to time to any employee.
In addition, Directors of the Corporation who are not employees of it
or any Subsidiary shall be eligible to participate in the Plan. For all
purposes of this Plan, any Director who is not also a common law employee and
is granted an option under this Plan shall be considered an "employee" until
the effective date of such Director's resignation or removal from the
Corporation's Board of Directors (including removal as a result of death or
disability); the Employment Date of such a Director shall be the date of such
Director's election to the Board of Directors.
On December 7 of each year of the term of the Plan, each Director who
is an employee solely by virtue of the Plan and not otherwise a common law
employee ("Outside Director") shall automatically, and without further action
of the Committee or the Board of Directors, be granted an option for 25,000
shares of Common Stock. Such options shall be the only options granted to any
Outside Director hereunder, unless and until such Outside Director becomes a
common law employee.
The holders of Options shall not be, or have any of the rights or
privileges of, a shareholder of the Corporation in respect of any shares
purchasable upon the exercise of any part of an option unless and until
certificates representing such shares shall have been issued by the Corporation
to such holders.
3. STOCK.
Stock subject to options and other provisions of this Plan shall be
shares of authorized and unissued or re-acquired $0.01 par value Common Stock
of the Corporation ("Common Stock"). Subject to adjustment in accordance with
the provisions of Section 10 hereof, the total number of shares of Common Stock
of the Corporation which may be purchased pursuant to options granted under the
Plan shall not exceed in the aggregate 10,000,000 shares.
In the event that any outstanding option under the Plan expires or is
terminated for any reason prior to the end of the period during which options
may be granted hereunder, the shares of Common Stock allocable to the
unexercised portion of such option may again be subjected to an option under
the Plan.
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<PAGE> 18
4. TERMS AND CONDITIONS OF OPTIONS.
Stock options granted pursuant to the Plan shall be evidenced by
agreements in such form as the Compensation Committee of the Corporation (the
"Committee"), shall, from time to time, approve, which agreements shall comply
with and be subject to the following terms and conditions:
a. Option Price:
The option price shall not be less than the fair market value,
as defined in Section 21 hereof, of the shares of Common Stock of the
Corporation.
b. Number of Shares:
The option shall state the total number of shares (subject to
adjustment as provided herein) to which it pertains.
c. Term of Options:
Each option granted under the Plan shall be for a term not in
excess of 10 years from the date the option is granted.
d. Payment for Shares:
Payment for shares of Common Stock purchased shall be made in
such manner as the Committee shall determine, but in any event may be
made in cash or by the optionee's delivery to the Corporation of
shares of Common Stock which have a fair market value, as defined in
Section 21 hereof, equal to the option price, or any combination of
cash and shares of Common Stock having an aggregate fair market value
equal to the option price.
e. Date of Exercise:
The Committee shall have the discretion to determine when an
option granted hereunder may be exercised.
5. OTHER PROVISIONS:
Agreements or documents concerning grants of options under the Plan
may contain such other provisions as the Committee, in its discretion, deems
advisable. The Committee may grant options to individuals which are
conditioned upon such individuals' becoming employees of the Corporation and
remaining employees of the Corporation for a certain period.
6. ASSIGNABILITY:
No option shall be assignable or transferable except by will or by the
laws of descent and distribution. During the lifetime of the optionee, an
option shall be exercisable only by him.
7. EXERCISE UPON DEATH, RETIREMENT, AND ON TERMINATION OF EMPLOYMENT.
No option granted under the Plan may be exercised at any time after
its term.
a. In the event of death of an optionee while an employee of the
Corporation, all unexercised options shall accelerate and be
exercisable by the personal representative of such optionee within the
remaining term of the option.
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<PAGE> 19
b. In the event of the retirement or total disability of an
optionee while an employee, all unexercised stock options shall
accelerate and be exercisable by the optionee within the remaining
term of the option.
"Retirement" means:
(i) For optionees who are employees, their normal
retirement date under a Corporation plan or if no plan exists,
as the same may be determined by the committee; and
(ii) For optionees who are outside directors, the date
they cease to be a director.
The "total disability" of an optionee shall be deemed to mean
total disability as defined pursuant to any disability plan or
disability policy of the Corporation; if no such plan or policy is in
effect, total disability shall be deemed to occur whenever an optionee
is rendered permanently unable to perform his duties for the
Corporation on a full-time basis, as a result of personal injury,
disabilities or illness.
c. On the optionee's termination of employment with the
Corporation for any reason other than death, retirement or disability
as set forth in sub-sections 7a and b hereinabove, all unexercised
stock options granted to such optionee shall terminate and expire.
Provided, however, that prior to termination of employment, the
optionee may exercise the unexercised portions of his stock options to
the extent that such options are, as of such date of exercise,
otherwise eligible to be exercised in accordance with the provisions
of this Plan.
d. Employment by the Corporation shall be deemed to include
employment by a Subsidiary. The Committee shall have the authority to
determine whether or not an optionee has terminated his employment
with the Corporation.
8. ADMINISTRATION:
Unless otherwise provided for as set forth in Section 8 hereof, the
Plan shall be administered by the Committee, all of whom are "disinterested
administrators" as the term is defined under the Securities Exchange Act of
1934, and the rules promulgated thereunder.
The Committee is authorized, in its discretion from time to time to
grant options under the Plan, to establish such rules and regulations as it
deems necessary for the proper administration of the Plan, and to make such
determinations and interpretations and to take such steps in connection with
the Plan or the options granted thereunder as it deems necessary or advisable.
All such action by the Committee under the Plan or with respect to the options
granted thereunder shall be final and binding on all parties. No director or
Committee member shall be liable for any action taken or determination made in
good faith.
In addition to such other rights of indemnification as they may have
as directors, the Board of Directors and the members of the Committee acting
pursuant to the provisions hereof shall be indemnified by the Corporation
against the reasonable expenses, including attorneys' fees actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal thereof, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan or any option granted thereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is
approved by independent legal counsel selected by the Corporation) or paid by
them in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such action,
suit or proceeding, that such director(s), the Committee or member thereof is
liable for negligence or misconduct in the performance of their or his duties;
provided that within sixty (60) days after the institution of such action, suit
or proceeding, the director(s) or Committee shall, in writing signed by at
least one member, offer the Corporation the opportunity, at its own expense, to
handle and defend the same.
-3-
<PAGE> 20
9. RECAPITALIZATION, MERGER AND CONSOLIDATION.
(a) The existence of this Plan and options granted hereunder shall
not affect in any way the right or power of the Corporation or its
shareholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the
Corporation's capital structure or its business, or any merger or
consolidation of the Corporation, or any issue of bonds, debentures,
preferred or prior preference stocks ahead of or affecting the Common
Stock or the rights thereof, or the dissolution or liquidation of the
Corporation, or any sale or transfer of all or any part of its assets
or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.
(b) The aggregate number of shares of Common Stock which may be
purchased pursuant to options granted under the Plan, and the
consideration payable per share upon exercise, shall be
proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a subdivision or
consolidation of shares or other capital adjustment, or the payment of
a stock dividend or other increase or decrease in such shares,
effected without receipt of consideration by the Corporation;
provided, however, that any fractional shares resulting from any such
adjustment shall be eliminated for the purposes of such adjustment.
(c) Subject to any required action by the shareholders, if the
Corporation shall be the surviving or resulting corporation in any
merger or consolidation, any option granted hereunder shall pertain to
and apply to the securities or rights (including cash, property or
assets) to which a holder of the number of shares of Common Stock
subject to the option would have been entitled.
(d) In the event of any merger or consolidation pursuant to which
the Corporation is not the surviving or resulting corporation, there
shall be substituted for each share of Common Stock subject to the
unexercised portions of such outstanding options, that number of
shares of each class of stock or other securities or that amount of
cash, property or assets of the surviving or consolidated corporation
which were distributed or distributable to the shareholders of the
Corporation in respect of each share of Common Stock held by them,
such outstanding options to be thereafter exercisable or such stock,
securities, cash or property in accordance with their terms.
Notwithstanding the foregoing, however, all such options may be
canceled by the Corporation as of the effective date of any such
reorganization, merger or consolidation or of any dissolution or
liquidation of the Corporation by giving notice to each holder thereof
or his personal representative of its intention to do so and by
permitting the purchase during the thirty (30) day period next
preceding such effective date of all of the shares subject to such
outstanding options.
(e) In the event that either sufficient shares of the
Corporation's Common Stock are purchased, or any lender, exchange or
similar offer is commenced which would, if successful (i) result in
any of the events described in paragraphs (c) and (d) of this Section
9, (ii) materially alter the structure or business of the Corporation,
or (iii) result in a change of control of the Corporation, then,
notwithstanding any other provisions in this Plan to the contrary, all
unmatured installments of options outstanding shall thereupon
automatically be accelerated and exercisable in full. The
determination of the Committee that any of the foregoing conditions
has been set shall be binding and conclusive on all parties.
(10) NON-ADJUSTMENT.
Except as hereinbefore expressly provided, the issue by the
Corporation of shares of stock of any class, or securities convertible into
shares of stock of any class, for cash or property, or for labor or services
either upon direct sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Corporation
convertible into such shares or other securities, shall not effect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to options granted pursuant to this Plan.
-4-
<PAGE> 21
(11) COMPUTATION OF ADJUSTMENT.
Upon the occurrence of each event requiring an adjustment of the
exercise price and/or the number of shares purchasable pursuant to options
granted pursuant to the terms of this Plan, the Corporation shall mail
forthwith to each optionee a copy of its computation of such adjustment, which
shall be conclusive and shall be binding upon each such optionee, except as to
any optionee who contests such computation by written notice to the Corporation
within thirty (30) days after receipt thereof of such optionee.
(12) RECORD DATES, ETC..
In case at any time after date of grant of options hereunder:
(a) the Corporation shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend
payable otherwise than in cash, or any distribution in respect of the
Common Stock (including cash), pursuant to, without limitation, any
spin-off, split-off or distribution of the Corporation's assets; or
(b) the Corporation shall take a record of the holders of its
Common Stock for the purpose of entitling them to subscribe for or
purchase any shares of stock of any class or to receive any other
rights; or
(c) of any classification, reclassification or other
reorganization of the capital stock of the Corporation, consolidation
or merger of the Corporation with or into another corporation, or
conveyance of all or substantially all of the assets of the
Corporation; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation; and in any such case, the Corporation
shall mail to each optionee, at least thirty (30) days prior thereto,
a notice stating the date or expected date on which a record is to be
taken for the purpose of such dividend, distribution or rights, or the
date on which such classification, reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding
up is to take place, as the case may be. Such notice shall also
specify the date or expected date, if any is to be fixed, as of which
holders of Common Stock of record shall be entitled to participate in
said dividend, distribution or rights, or shall be entitled to
exchange their shares of Common Stock for securities or other property
deliverable upon such classification, merger, conveyance, dissolution,
liquidation or winding up, as the case may be.
(13) LIQUIDATION, DISSOLUTION.
In case the Corporation shall at any time while any option under this
Plan shall be in force and remain unexpired, sell all or substantially all its
property or dissolve, liquidate or wind up its affairs, each optionee may
thereafter receive upon exercise hereof in lieu of each share of Common Stock
of the Corporation which such optionee would have been entitled to receive, the
same kind and amount of any securities or assets as may be issuable,
distributable or payable upon any such sale, dissolution, liquidation or
winding up with respect to each share of Common Stock of the Corporation. In
the event that the Corporation shall at any time prior to the expiration of any
option make any partial distribution of its assets, if the nature of a partial
liquidation, whether payable in cash or in kind (but excluding the distribution
of a cash dividend payable out of earned surplus and designated as such) then
in such event the exercise prices then in effect with respect to each option,
shall be reduced, on the payment date of such distribution, in proportion to
the percentage reduction in the tangible book value of the shares of the
Corporation's Common Stock (determined in accordance with generally accepted
accounting principles) resulting by reason of such distribution.
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<PAGE> 22
(14) CORPORATION COVENANTS AND PERFORMANCE.
The Corporation will not, by amendment of its Articles of
Incorporation or through reorganization, consolidation, merger, dissolution or
sale of assets, or by any other voluntary act or deed, avoid or seek to avoid
the observance or performance of any of the covenants, stipulations or
conditions to be observed or performed hereunder by the Corporation, but will
at all times in good faith assist, insofar as it is able, in the carrying out
of all provisions hereof, and in the taking of all other legally available
action which may be necessary in order to protect the rights of each optionee
against dilution, subject to the terms hereof. Without limiting the generality
of the foregoing, the Corporation agrees that it will not increase the par
value of shares of its Common Stock above the lowest exercise price then in
effect, and that, before taking any action which would cause an adjustment
reducing any such exercise price below the then par value of the shares of
Common Stock, the Corporation will take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Corporation may validly
and legally issue fully paid and nonassessable shares of its Common Stock at
the exercise price as so adjusted.
The Corporation further agrees:
(a) To the extent the exercise price per share of Common Stock
covered by options pursuant to this Plan equals or exceeds par value
per share, all shares issued upon exercise of options granted pursuant
to this Plan and in accordance with the terms hereof, will be, upon
issuance and payment therefor, fully paid and nonassessable and free
from all taxes, liens and charges with respect to the issue thereof
(other than taxes in respect of any transfer occurring
contemporaneously with such issue).
(b) During the term of the Plan, the Corporation will at all times
have authorized and reserved a sufficient number of shares of Common
Stock to provide for the exercise of all shares under options granted
pursuant to this Plan.
(c) So long as any Common Stock of the Corporation is listed on
the New York Stock Exchange or any other national securities exchange,
the Corporation shall use its best efforts to list on such exchange,
upon official notice of issuance upon exercise of options granted
under the Plan, and to maintain the listing of, all shares of Common
Stock issuable upon the exercise of options granted pursuant to the
Plan; and the Corporation will use its best efforts to so list on the
New York Stock Exchange or any such other national securities
exchange, and to maintain such listing, of any other securities of the
Corporation which may be acquired upon exercise of this option, if so
adjusted or modified pursuant to the terms of Section 9 hereof.
(15) OPTIONS IN SUBSTITUTION FOR STOCK OPTIONS GRANTED BY OTHER
CORPORATIONS.
Stock options may be granted under the Plan from time to time in
substitution for such options held by employees of a corporation who become or
are about to become key employees of the Corporation or a parent or subsidiary
corporation as the result of a merger or consolidation of the employing
corporation with the Corporation or a parent or subsidiary corporation or the
acquisition by either of the foregoing of stock of the employing corporation as
the result of which it becomes a parent or subsidiary corporation. The terms
and conditions of the substitute options so granted may vary from the terms and
conditions set forth in Section 4 of this Plan to such extent as the Committee
at the time of grant may deem appropriate to conform, in whole or in part, to
the provisions of the options in substitution for which they are granted.
(16) TERM OF GRANTS.
No stock option shall be granted pursuant to the Plan after ten (10)
years from the date of adoption of the Plan, but options theretofore granted
may extend beyond that date.
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<PAGE> 23
(17) AMENDMENTS.
The shareholders of the Corporation or the Committee or the Board of
Directors of the Corporation may at any time, without the consent of the
optionees, alter, amend, revise, suspend, or discontinue the Plan, provided
that such action shall not materially affect options theretofore granted under
the Plan.
(18) APPLICATION OF FUNDS.
The proceeds received by the Corporation from the sale of Common Stock
pursuant to options will be used for general corporate purposes.
(19) NO OBLIGATION TO EXERCISE OPTION.
The granting of an option shall impose no obligation upon any optionee
to exercise such option.
(20) INVESTMENT INTENT.
The Corporation may require that there be presented to and filed with
it by any optionee(s) under the Plan, such evidence as it may deem necessary to
establish that the options granted or the shares of Common Stock to be
purchased or transferred are being acquired for investment and not with a view
to their distribution.
(21) FAIR MARKET VALUE.
For the purposes of this Plan, "fair market value" of the
Corporation's shares of Common Stock shall be (i) the closing price per share
on any stock exchange on which the Common Stock is traded, or (ii) the mean
between the closing or average (as the case may be) bid and asked prices per
share of Common Stock on the over-the-counter market, whichever is applicable,
on the last trading day immediately preceding the grant of the option.
(22) APPROVAL OF SHAREHOLDERS.
The Plan shall be effective December 7, 1995, but subject to its
approval by the shareholders of the Corporation, at their meeting held
subsequent to the effective date of this Plan. In the event shareholder
approval is not obtained, this Plan shall thereupon terminate and be rendered
null and void. No shares of Common Stock shall be issued pursuant to an
option, prior to compliance with requirements under applicable laws and
regulations.
(23) GOVERNMENTAL REGULATIONS.
Notwithstanding any of the provisions hereof, or of any option granted
hereunder, the obligation of the Corporation to sell and deliver shares under
such options shall be subject to all applicable laws, rules and regulations and
to such approvals by any governmental agencies or national securities exchanges
as may be required, and the optionee shall agree that he will not exercise any
option granted hereunder, and that the Corporation will not be obligated to
issue any shares under any such option, if the exercise thereof or if the
issuance of such shares shall constitute a violation by the optionee or the
Corporation of any provision of any law or regulation of any governmental
authority.
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<PAGE> 24
APPENDIX B
SUNSHINE MINING AND REFINING COMPANY
877 West Main Street, Suite 600
Boise, Idaho 83702
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF SUNSHINE MINING AND REFINING COMPANY
The undersigned hereby appoints John S. Simko, William W. Davis and
Robert H. Peterson, or any of them, with full power of substitution, as Proxies
and hereby authorizes them to represent and to vote as designated below all of
the shares of Common Stock, par value $.01, of Sunshine Mining and Refining
Company (the "Company") held of record by the undersigned on June 20, 1996, at
the Annual Meeting of Stockholders to be held on July 30, 1996, or any
adjournment(s) thereof.
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees
contrary below) listed below.
G. Chris Andersen, V. Dale Babbitt, George M. Elvin, Daniel D. Jackson,
Oren G. Shaffer, John S. Simko, Robert B. Smith, Jr.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee write
that nominee's name on the space provided below.)
__________________________________________________
For Against Abstain
[ ] [ ] [ ]
2. Approval for adoption of the 1995 Employee Nonqualified Stock Option
Plan of the Company.
3. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
THIS PROXY, WHEN PROPERTY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THE
PROXIES SHALL VOTE FOR EACH OF THE ABOVE PROPOSALS AND FOR THE ELECTION OF THE
NOMINEES FOR DIRECTOR NAMED ABOVE.
Please sign exactly as name appears below.
When shares are held by joint tenants,
both should sign. When signing as
attorney, executor, administrator,
trustee or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by President
or other authorized officer. If a
partnership, please sign in the
partnership name by authorized person.
Date , 1996
-------------------------
----------------------------------------
Signature
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Signature if held jointly
Please mark, sign, date and promptly
return this proxy card using the
enclosed envelope.
