SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 8-K
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report
(Date of earliest event reported): February 18, 1997
Hecla Mining Company
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
1-8491 82-0126240
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(Commission File Number) (IRS Employer Identification No.)
6500 Mineral Drive
Coeur d'Alene, Idaho 83814-8788
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(Address of principal executive offices) (Zip Code)
(208) 769-4100
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(Registrant's Telephone Number)<PAGE>
Item 5. OTHER EVENTS.
Hecla Mining Company (the "Company" or the
"Registrant") and Muzinich & Co., Inc. ("Muzinich") have
entered into an Engagement Agreement, dated as of February 18,
1997 (the "Engagement Agreement"), pursuant to which Muzinich
has agreed to act as placement agent with respect to 3,950,000
shares of the Company's Common Stock, par value $0.25 per share
("Common Stock"). The Engagement Agreement is attached hereto
as Exhibit 99.01 and incorporated herein by this reference.
In connection and concurrent with the execution of
the Engagement Agreement, the Company and Muzinich entered into
an Indemnification Agreement, dated as of February 18, 1997,
which is attached hereto as Exhibit 99.02 and incorporated
herein by this reference.
On February 18, 1997, the Company entered into
subscription agreements with each of the entities set forth in
Annex I to this Form 8-K which is incorporated herein by this
reference, for the sale by the Company to such entities of an
aggregate number of 3,950,000 shares of Common Stock (the
"Subscription Agreements"). The form of Subscription Agreement
is attached hereto as Exhibit 99.03 and incorporated herein by
this reference.
Additionally, as disclosed in the Prospectus
Supplement to be used in connection with the sale of 3,950,000
shares of Common Stock pursuant to the Subscription Agreements,
the Company's ore reserves data as of December 31, 1996 is as
follows:
2<PAGE>
ORE RESERVES DATA
AS OF DECEMBER 31, 1996
Proven and Probable
<TABLE>
<CAPTION>
Hecla's Share
of Reserves (1) Ore Grade
--------------- ------------------------------------------------------------
Mine-(Hecla Gold Silver Lead Zinc
Interest in %) (Tons) (oz/ton) (oz/ton) (%) (%)
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Grouse Creek (approx. 80%)(2) 481,840 0.040 0.3 - -
La Choya (3) 3,005,231 0.024 - - -
Lucky Friday (4) 1,245,660 - 14.9 11.3 2.2
Greens Creek (29.73%)(5) 2,641,702 0.151 19.5 4.6 12.6
Rosebud (50.0%)(6) 638,317 0.392 2.7 - -
</TABLE>
<TABLE>
<CAPTION>
Contained Metal
--------------------------------------------------------------------------------
Mine-(Hecla Gold Silver Lead Zinc
Interest in %) ounces ounces tons tons
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Grouse Creek (approx. 80%)(2) 23,843 179,042 - -
La Choya (3) 115,418 - - -
Lucky Friday (4) - 18,512,024 140,608 26,872
Greens Creek (29.73%)(5) 398,046 51,587,608 120,096 333,849
Rosebud (50.0%)(6) 249,942 1,713,945 - -
------- ---------- ------- -------
787,249 71,992,619 260,704 360,721
======= ========== ======= =======
<FN>
(1) The Company reports ore reserves from estimates of the
quantities and grades of mineralized material at the Company's
mines which the Company believes can be recovered and sold at
prices in excess of the cash cost of production. The estimates
are based largely on current costs and on projected prices and
demand for the Company's products. Ore reserves are stated
separately for each of the Company's mines based upon factors
relevant to each mine. Ore reserves represent diluted in-place
grades and do not reflect losses in the recovery process. The
Company's estimates of proven and probable reserves for the
Lucky Friday mine, the Rosebud mine, the Grouse Creek mine and
the La Choya mine at December 31, 1996 are based on a gold price
of $386 per ounce, silver price of $5.20 per ounce, lead price
of $0.38 per pound and zinc price of $0.52 per pound,
respectively. Proven and probable reserves for the Greens Creek
mine are based on calculations of reserves provided to the
Company by the operator of this property. These calculations
have been reviewed but not independently confirmed by the
Company. Kennecott Greens Creek Mining Company's (the mine
operator) estimates of proven and probable reserves for the
Greens Creek mine as of December 1996, are derived from
successive generations of reserve and feasibility analyses for
three different areas of the mine, each using a separate
assessment of metal prices. The prices used were:
East Ore Area West Ore Area Southwest Ore Area
Gold (per ounce) $ 340 $ 350 $ 360
Silver (per ounce) 4.50 4.75 5.00
Lead (per pound) 0.33 0.28 0.28
Zinc (per pound) 0.60 0.57 0.50
Changes in reserves represent general indicators of the results
of efforts to develop additional reserves as existing reserves
are depleted through production. Grades of ore fed to process
may be different from stated reserve grades because of variation
in grades in areas mined from time to time, mining dilution and
other factors. Reserves should not be interpreted as assurances
of mine life or of the profitability of current or future opera-
tions.
(2) Two distinct ore deposits have been identified at the
Grouse Creek mine: the Sunbeam deposit and the Grouse deposit.
Both deposits are mineable by open pit methods. The Company
currently plans to continue mining ore from the Sunbeam pit
through the second quarter of 1997. In 1996, management and the
Company's Board of Directors decided to defer the development of
the Grouse ore body as it is uneconomical at current metals
prices. The Company intends to suspend operations at the Grouse
Creek mine when mining and milling of the Sunbeam pit ore is
completed. The mine will then be placed on a care-and-
maintenance status. In connection with the decision to suspend
operations at the Grouse Creek mine, the Company determined that
the mineralized material contained in the Grouse pit cannot be
mined and processed economically at current metals prices.
Accordingly, the Grouse deposit is presently not considered a
reserve and is not included in the Company's reserves at
December 31, 1996. Proven and probable reserves include Hecla's
approximate 80% share of 5,733 ounces of gold and 34,435 ounces
of silver contained in mined stockpiles. On January 31, 1997,
Great Lakes Minerals Inc. ("Great Lakes") and the Company
entered into a letter agreement terminating the Grouse Creek
Joint Venture and conveying Great Lakes' 20% interest in
3<PAGE>
the Grouse Creek project to Hecla. Great Lakes retained a 5%
defined net proceeds interest in the project. The Company has
assumed 100% of the interests and obligations associated with
the property.
(3) At December 31, 1996, estimated recoverable gold ounces on
the heap leach pad totaling 44,197 gold ounces are included in
ore reserves. The ounces were placed on the pad during 1994-
1996 and are currently estimated to be recovered over the mine's
remaining life.
(4) Includes 62,834 and 12,053 tons of lead and zinc,
respectively, and 11,144,579 ounces of silver from the adjacent
Lucky Friday expansion project, formerly referred to as the Gold
Hunter development project.
(5) Ore reserves at the Greens Creek mine represent in-place
material, diluted and adjusted for expected mining recovery.
Process plant recoveries of ore reserve grades by the mine are
expected to be 75% for silver, 72% for gold, 89% for zinc and
84% for lead. Payable recoveries of ore reserve grades by
smelters and refiners are expected to be 66% for silver, 58% for
gold, 69% for zinc and 69% for lead.
(6) Proven and probable mineral reserves at Rosebud reflect
only the Company's share (50%) pursuant to the September 6,
1996, sale of a 50% interest in the property to Santa Fe Pacific
Gold Corporation ("Santa Fe"). Pursuant to the terms of the
agreement, a limited liability corporation was established with
each party owning a 50% interest to develop the Rosebud gold
property. Under the terms of the agreement, Hecla will manage
the mining activities and ore will be hauled via truck
approximately 100 miles to Santa Fe's Twin Creeks Pinon Mill for
processing. Total mine site capital expenditures to bring the
mine into production are expected to be approximately $20-$25
million, of which $11.1 million has been expended through
December 31, 1996. Santa Fe funded the first $12.5 million of
mine-site development and Santa Fe is also responsible, under
the terms of the agreement, to fund costs of road and mill
facility improvements. Santa Fe also contributed exploration
property located near the Rosebud property to the joint venture,
and will fund the first $1.0 million in exploration
expenditures, and two-thirds of future exploration expenditures
beyond the initial $1.0 million. Construction and development
activities to date have included development of a second portal
to the mine, 2,500 feet of underground drifting, a six-mile
power line, an eight-mile access road, and surface plant
facilities necessary to support the underground operation. At
December 31, 1996, surface plant facilities are approximately
85% complete. Construction and development activities are
currently expected to be completed in the second quarter of
1997, with production anticipated to commence in the second
quarter of 1997. Since Rosebud is a development project with no
prior operating history, it is possible that the Company may
experience different economic relations than it currently
forecasts. It is not unusual in new mining operations to
experience unexpected problems during the development and start-
up phases.
RESERVES -- That part of a mineral deposit which could be eco-
nomically and legally extracted or produced at the time of the
reserve determination. Reserves are customarily stated in terms
of "Ore" when dealing with metalliferous minerals.
PROVEN RESERVES -- Reserves for which tonnage is computed from
dimensions revealed in outcrops, trenches, workings or drill
holes and for which the grade and/or quality is computed from
the results of detailed sampling. The sites for inspection,
sampling and measurement are spaced so closely and the geologic
character is so well defined that size, shape, depth and mineral
content of reserves are well established.
PROBABLE RESERVES -- Reserves for which tonnage and grade and/or
quality are computed from information similar to that used for
proven reserves, but the sites for inspection, sampling and
measurement are farther apart or are otherwise less adequately
spaced. The degree of assurance, although lower than that for
proven reserves, is high enough to assume continuity between
points of observation.
</FN>
</TABLE>
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
Exhibit 99.01 - Engagement Agreement, dated as of
February 18, 1997, by and between
Hecla Mining Company and Muzinich &
Co., Inc.
Exhibit 99.02 - Indemnification Agreement, dated as of
February 18, 1997, by and between
Hecla Mining Company and Muzinich &
Co., Inc.
Exhibit 99.03 - Form of Subscription Agreement.
4<PAGE>
ANNEX I
PARTIES TO THE SUBSCRIPTION AGREEMENTS
NATIO - FONDS VALDOR
INVESTARIT AG
VESIGEST S.A.
GESTOR FINANCE
BANK LIPS LTD, ZUERICH
BAYERISCHE HYPOTHEKEN-UND WECHSEL-BANK AKTIENGESELLSCHAFT
HANNOVER RE
BANQUE INDOSUEZ LUXEMBOURG
UNIGESTION
BANQUE D'ORSAY
SOCIETE BANCAIRE JULIUS BAER SA, GENEVE
MULTIFINANCE S.A. ON BEHALF OF TOWER FUND GLOBAL EQUITY
COLONIA INSURANCE GROUP
BANQUE HERVET
BANK SAL. OPPENHEIM JR. & CIE (SCHWEIZ) AG
AUBERT
SYNALGEST
BANQUE HOTTINGUER
SIZAV CAPITAL MULTISTRATEGIES (COMPARTIMENT GESTION GLOBALE)
VP FINANCE
CONSULTING AND MANAGEMENT SERVICES LTD ON BEHALF OF ONE OF ITS
CLIENTS
JULIUS BAER ASSET MANAGEMENT LTD.
BANQUE SIFAS
CARL VON ROHRER VERMOGENSVERWALTUNG
E&S RUCH
ARIANE INVESTORS LTD.
DEMACHY WORMS ET CIE
5<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
HECLA MINING COMPANY
By: /s/ John P. Stilwell
Name: John P. Stilwell
Title: Chief Financial Officer
Dated: February 19, 1997
6<PAGE>
EXHIBIT INDEX
Exhibit No. Title
----------- -----
99.01 Engagement Agreement, dated as of February 18,
1997, by and between Hecla Mining Company and
Muzinich & Co., Inc.
99.02 Indemnification Agreement, dated as of February
18, 1997, by and between Hecla Mining Company
and Muzinich & Co., Inc.
99.03 Form of Subscription Agreement.
EXHIBIT 99.01
MUZINICH & CO., INC.
450 Park Avenue
New York, New York 10022
February 18, 1997
Hecla Mining Company
6500 Mineral Drive
Coeur d'Alene, Idaho 83814
Ladies and Gentlemen:
Hecla Mining Company ("Hecla") has advised Muzinich &
Co., Inc. ("Muzinich") that Hecla wishes to retain Muzinich to
provide services to Hecla as placement agent in connection with
the sale (the "Offering") of not less than 3,200,000 shares and
not more than 4,500,000 shares of Hecla's common stock, par
value $.25 per share (the "Common Stock").
The purpose of this letter agreement (this "Agree-
ment") is to confirm the engagement of Muzinich by Hecla in
connection with the Offering.
Section 1. Engagement of Muzinich in connection with
Proposed Offering. Hecla hereby retains Muzinich, and Muzinich
hereby agrees to act as placement agent for Hecla, and agrees
to use its best efforts to sell, not less than 3,200,000 shares
and not more than 4,500,000 shares of the Common Stock (the
"Shares"), for the highest possible price per share, with the
price to be received by Hecla being adjusted to reflect market
conditions providing for a discount to the closing price of the
Common Stock on the date of the closing of the Offering, and to
perform all other services as is customary for a placement
agent and which are necessary to consummate the transactions
contemplated by this Agreement. The final price per share is
subject to the approval of Hecla in its sole discretion. The
Shares will be registered with the Securities and Exchange Com-
mission pursuant to the Securities Act of 1933, as amended,
pursuant to Hecla's currently effective shelf registration
statement.<PAGE>
2
Section 2. Compensation. As compensation for
Muzinich's services in connection with the issuance of the
Shares, Hecla shall pay Muzinich the following fees upon re-
ceipt of the proceeds from such sale:
(a) a placement fee of 4.3% of the gross proceeds
received by Hecla from the issuance of the
Shares, payable upon receipt of the proceeds
from such sale, and all reasonable legal fees
and expenses incurred by Muzinich (with such
fees and expenses in excess of $20,000 being
pre-approved by Hecla); and
(b) if Hecla terminates this Agreement prior to the
closing of the Offering and, at the time of such
termination, Muzinich is not in breach in any
material respect of any of its obligations under
this Agreement, a fee of 0.50% of the funds
theretofore committed by investors pursuant to
written subscription agreements and all reason-
able out-of-pocket expenses (including reason-
able legal fees and expenses) incurred by
Muzinich in connection with the Offering (with
such fees and expenses in excess of $20,000
being pre-approved by Hecla).
Section 3. Other Agreements.
(a) Term. Muzinich's engagement hereunder may be
terminated by Muzinich at any time or, after the
date which is 20 days from the execution of this
letter, by Hecla, by prior written notice there-
of to other party; provided, however, that the
provisions of Sections 2(b), 3(c), 3(d) and 3(f)
shall survive such termination.
(b) Information. During the term of this Agreement,
Hecla agrees to furnish Muzinich with such in-
formation about Hecla as Muzinich reasonably
requests ("Company Information"). Hecla repre-
sents and warrants to Muzinich that all Company
Information will be accurate in all material
respects at the time it is furnished and will
not contain any untrue statement of a material
fact or omit to state a material fact necessary
in order to make the statements therein not mis-
leading in <PAGE>
3
light of the circumstances under which such
statements are made, and agrees to advise
Muzinich prior to the sale of any shares of all
developments materially affecting Hecla,
or the accuracy of Company Information previ-
ously furnished to Muzinich or prospective pur-
chasers of the Shares. Hecla recognizes and
confirms that Muzinich (i) will be relying sole-
ly on such information and other information
available from generally recognized public
sources in performing the services contemplated
hereunder, (ii) will not independently verify
the accuracy or completeness of such informa-
tion, (iii) does not assume responsibility for
the accuracy or completeness thereof, and (iv)
will make appropriate disclaimers consistent
with the foregoing. In addition, any written
representations and warranties made by Hecla to
purchasers of the Shares shall be deemed to be
incorporated into this Agreement.
(c) Indemnification. Hecla agrees to indemnify
Muzinich and its affiliates and each person in
control of Muzinich and its affiliates and their
respective officers, directors, employees,
agents and representatives as provided in the
indemnity letter dated the date hereof and
attached hereto.
(d) No Shareholder Rights. Hecla acknowledges and
agrees that Muzinich has been retained only by
Hecla and that Hecla's engagement of Muzinich is
not deemed to be on behalf of and is not in-
tended to confer rights upon any shareholder,
owner or partner of Hecla or any other person
not a party hereto as against Muzinich or any of
its affiliates or the directors, officers, em-
ployees, agents and representatives of Muzinich.
Unless otherwise expressly agreed, no one other
than Hecla is authorized to rely upon Hecla's
engagement of Muzinich or any statements, advice
or opinions by Muzinich to Hecla.
(e) Miscellaneous. This Agreement may be executed
in two or more counterparts, all of which to-
gether shall be considered a single instrument.
The term "affiliate" as used herein shall have
the meaning ascribed to <PAGE>
4
such term in the rules and regulations
promulgated under the Securities Exchange Act of
1934, as amended. Hecla confirms that it will
rely on its own counsel, accountants and other
similar expert advisors for legal, accounting,
tax and other similar expert advice. This
Agreement and the indemnity letter of even date
herewith constitute the entire agreement between
the parties with respect to the subject matter
hereof and supersede all other prior agreements
and understandings, both written and oral,
between the parties hereto with respect to the
subject matter hereof and cannot be amended or
otherwise modified except in writing executed by
the parties hereto. The provisions hereof shall
inure to the benefit of and be binding upon the
successors and permitted assignees of Hecla and
Muzinich. This letter is not intended to be and
should not be construed as a commitment with
respect to the underwriting, sale or placement
of the Shares and, except as expressly set forth
herein, creates no obligation or liability on
the part of Muzinich in connection therewith.
(f) Confidentiality. Except as required by law and
except with respect to any information that
otherwise becomes publicly available other than
as a result of a breach of this clause (f),
Muzinich agrees that it and its officers, em-
ployees, affiliates and agents will treat confi-
dentially and take reasonable precautions to
preserve and protect the confidentiality of and
otherwise refrain from disclosing to any person
other than officers, employees, affiliates and
agents of Muzinich any and all information fur-
nished to Muzinich pursuant to the terms of this
Agreement and consistent with industry practices
and will not use any of such information for any
purpose other than as set forth herein. In the
event that disclosure by Muzinich of any such
information is required by law, Muzinich shall,
if reasonably practicable, notify Hecla of such
requirement prior to disclosing any information
thereunder, and, in any event, shall notify
Hecla promptly after such disclosure. Muzinich
will not provide any information to prospective
investors other than publicly available informa-
tion.<PAGE>
5
(g) Use of Name; Disclosure; Muzinich Advice, Role,
etc. Hecla agrees that any references to
Muzinich made in connection with the Offering
are subject to Muzinich's prior approval, which
approval shall not be unreasonably withheld or
delayed. Hecla acknowledges that all analyses,
evaluations and advice (whether written or oral,
formal or informal) given by Muzinich to Hecla
in connection with its engagement hereunder are
intended solely for the benefit and use of Hecla
(including its management, directors and attor-
neys) in considering the transaction to which
they relate and Hecla agrees that no such opin-
ion or advice shall be used for any other pur-
pose or reproduced, disseminated, quoted or
referred to at any time, in any manner or for
any purpose, without Hecla's prior written con-
sent, which shall not be unreasonably withheld
or delayed. Muzinich is authorized upon consum-
mation of the Offering contemplated hereby to
place the customary "tombstone" advertisement in
publications of its choice at Muzinich's ex-
pense. Nothing in this Agreement is intended to
obligate or commit Muzinich to provide any ser-
vices other than as set out herein.
(h) GOVERNING LAW, ETC. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK (WITHOUT
REGARD TO THE CONFLICTS OF LAW PROVISIONS THERE-
OF). ANY RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) RELATED TO OR ARIS-
ING OUT OF THE OFFERING, AND MUZINICH'S ACTIVI-
TIES PURSUANT TO, OR THE PERFORMANCE BY MUZINICH
OF THE SERVICES CONTEMPLATED BY, THIS AGREEMENT
IS HEREBY WAIVED BY HECLA AND MUZINICH. HECLA
HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION
OF THE FEDERAL AND NEW YORK STATE COURTS LOCATED
IN THE CITY OF NEW YORK IN CONNECTION WITH ANY
DISPUTE RELATED TO THIS AGREEMENT OR ANY OF THE
MATTERS CONTEMPLATED HEREBY. HECLA AGREES THAT
ANY LEGAL SUIT, ACTION OR PROCEEDING BROUGHT BY
MUZINICH, ANY OF ITS AFFILIATES OR ANY INDEMNI-
FIED PARTY TO ENFORCE ANY RIGHTS UNDER OR WITH
RESPECT TO THIS AGREEMENT OR THE <PAGE>
6
OFFERING MAY BE INSTITUTED IN ANY STATE OR
FEDERAL COURT IN THE CITY OF NEW YORK, STATE OF
NEW YORK, WAIVES TO THE FULLEST EXTENT PERMITTED
BY LAW ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING BY SUCH PARTIES
AND IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT,
ACTION OR PROCEEDING BY SUCH PARTIES.
(i) Closing. The closing of the sale and purchase
of the Shares shall take place at a closing (the
"Closing") to be held at the offices of
Wachtell, Lipton, Rosen & Katz, 51 West 52nd
Street, New York, New York 10019 at 10:00 a.m.
on the third business day after investors have
entered into binding written subscription com-
mitments acceptable to Hecla to purchase at
least 3,200,000 Shares, or such later date and
time as may be mutually selected by the parties
hereto. At the Closing, Hecla will deliver the
Shares against payment of the purchase price
therefor by wire transfer to an account desig-
nated by Hecla.
Section 4. Notices. Notice given pursuant to any of
the provisions of this Agreement shall be in writing and shall
be mailed or delivered or faxed (a) to Hecla, at the address
listed on the front of this Agreement and (b) to Muzinich, at
450 Park Avenue, New York, New York 10022, (212) 888-3413,
Attention: George Muzinich.<PAGE>
7
We are delighted to accept this engagement and look
forward to working with you on this assignment. Please confirm
that the foregoing is in accordance with your understanding by
signing and returning to us the enclosed duplicate of this let-
ter.
Very truly yours,
MUZINICH & CO., INC.
By: /s/ George R. Muzinich
Name: George R. Muzinich
Title: President
AGREED TO AND ACCEPTED
as of the date first
written above:
HECLA MINING COMPANY
By: /s/ John P. Stilwell
Name: John P. Stilwell
Title: VP - CFO
EXHIBIT 99.02
MUZINICH & CO., INC.
450 Park Avenue
New York, New York 10022
February 18, 1997
Hecla Mining Company
6500 Mineral Drive
Coeur d'Alene, Idaho 83814
Ladies and Gentlemen:
In connection with our engagement letter dated the
date hereof (the "Agreement"):
You hereby agree to indemnify and hold harmless us
and our directors, officers, partners, agents, employees,
representatives and control persons (collectively, the
"Indemnified Persons") from and against any losses, claims,
damages, liabilities or reasonable expenses incurred by them
(including reasonable fees and disbursements of counsel) which
(i) are related to or arise out of (A) actions taken or omitted
to be taken (including any untrue statements made or any
statements omitted to be made) by you or (B) actions taken or
omitted to be taken by an Indemnified Person with your written
consent or (ii) are otherwise related to or arise out of or in
connection with, in each case, the proposed transactions giving
rise to or contemplated by the Agreement, including
modifications or future additions to the Agreement, and to
reimburse us promptly and any other Indemnified Person for all
reasonable out-of-pocket expenses (including reasonable fees
and disbursements of counsel) as incurred by us or any such
Indemnified Person in connection with investigating, preparing
or defending any such action or claim, whether or not in
connection with pending or threatened litigation in which we or
any other Indemnified Person is a party. You will not,
however, be responsible for any losses, claims, damages,
liabilities or expenses of any Indemnified Person pursuant to
clause (i)(B) or clause (ii) of the preceding sentence to the
extent same have resulted from the gross negligence, bad faith,
wilful misconduct or recklessness of us or such Indemnified
Person. You also agree that if any indemnification sought by
an Indemnified Person pursuant to the Agreement is for any<PAGE>
2
reason held by a court to be unavailable (except as provided in
the preceding sentence), then (whether or not we are the
Indemnified Person) you and we will contribute to the losses,
claims, liabilities, damages and expenses for which such
indemnification is held unavailable in such proportion as is
appropriate to reflect the relative benefits received by you on
the one hand and by us on the other hand from the transaction
giving rise to or contemplated by the Agreement, and also the
relative fault of you, on the one hand, and of us and the
Indemnified Person, on the other, subject to the limitation
that in any event our aggregate contribution to all losses,
claims, damages, liabilities and expenses with respect to which
contributions are available hereunder will not exceed the
amount of fees actually received by us from you pursuant to the
proposed transactions giving rise to or contemplated by the
Agreement. For the purposes of determining the relative ben-
efits to you on the one hand, and us on the other hand, under
the proposed transactions giving rise to or contemplated by the
Agreement, such benefits shall be deemed to be in the same pro-
portion as (i) the total value paid or proposed to be paid by
you pursuant to the transactions, whether or not consummated,
for which we are providing services as provided in the Agree-
ment bears to (ii) the fees paid or proposed to be paid by you
or on your behalf to us in connection with the proposed trans-
actions giving rise to or contemplated by the Agreement. No
person found liable for a fraudulent misrepresentation shall be
entitled to contribution from any person who is not also found
liable for such fraudulent misrepresentation. Your indemnity,
reimbursement and contribution obligations under this agreement
shall be in addition to any rights that we or any other Indem-
nified Person may have at common law or otherwise.
If any action, suit, proceeding or investigation is
commenced, as to which an Indemnified Person proposes to demand
indemnification, it shall notify you promptly; provided,
however, that any failure by such Indemnified Person to notify
you shall not relieve you from your obligations hereunder
(except to the extent that you are materially prejudiced by
such failure to notify promptly). You shall be entitled to
assume the defense of any such action, suit, proceeding or
investigation, including the employment of counsel reasonably
satisfactory to the Indemnified Person. The Indemnified Person
shall have the right to counsel of its own choice to represent
it, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Person unless (i) you have failed
promptly to assume the defense and employ counsel reasonably
satisfactory to the Indemnified Person in accordance with the
preceding sentence or (ii) the Indemnified Person and <PAGE>
3
you shall have been advised in writing by counsel that there
exists actual or potential material conflicting interests
between you and such Indemnified Person, including situations
in which one or more legal defenses may be available to such
Indemnified Person that are different from or additional to
those available to you; provided, however, that you shall not,
in connection with any one such action or proceeding or
separate but substantially similar actions or proceedings
arising out of the same general allegations be liable for fees
and expenses of more than one separate firm of attorneys (in
addition to any local counsel) at any time for all Indemnified
Persons; and such counsel shall, to the extent consistent with
its professional responsibilities, cooperate with you and any
counsel designated by you.
You further agree that you will not, without our
prior written consent, which shall not be unreasonably withheld
or delayed, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought
hereunder if any Indemnified Person is an actual party to such
claim, action, suit or proceeding unless such settlement,
compromise or consent includes an unconditional release of us
and each other Indemnified Person from all liability and
obligations arising therefrom. You further agree that neither
we nor any of our directors, officers, partners, agents,
employees, representatives or control persons shall have any
liability to you arising out of or in connection with the
proposed transactions giving rise to or contemplated by the
Agreement except for such liability for losses, claims,
damages, liabilities, or expenses to the extent they have
resulted from our or their gross negligence, bad faith, wilful
misconduct or recklessness. This agreement may not be amended
or modified except in writing. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAWS, AND ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM,
ACTION, SUIT OR PROCEEDING ARISING OUT OF OR CONTEMPLATED BY
THE AGREEMENT IS HEREBY WAIVED. YOU HEREBY SUBMIT TO THE NON-
EXCLUSIVE JURISDICTION OF THE FEDERAL AND NEW YORK STATE COURTS
LOCATED IN THE CITY <PAGE>
4
OF NEW YORK IN CONNECTION WITH ANY DISPUTE RELATED TO THE
AGREEMENT OR ANY MATTERS CONTEMPLATED HEREBY.
Very truly yours,
MUZINICH & CO., INC.
By: /s/ George R. Muzinich
Name: George R. Muzinich
Title: President
AGREED TO AND ACCEPTED
as of the date first written above:
HECLA MINING COMPANY
By: /s/ John P. Stilwell
Name: John P. Stilwell
Title: VP - CFO
EXHIBIT 99.03
February __, 1997
Hecla Mining Company
6500 Mineral Drive
Coeur d'Alene, Idaho 83814
Attention: John P. Stilwell
RE: SUBSCRIPTION AGREEMENT
Gentlemen:
1. The undersigned (the "Purchaser") hereby subscribes
for, and agrees to purchase from Hecla Mining Company, a
Delaware corporation (the "Company"), __________ shares (the
"Shares") of the Company's Common Stock, par value U.S.$0.25
per share (including the preferred stock purchase rights
associated with the Common Stock issued pursuant to that
certain Right Agreement, dated as of May 10, 1996, between the
Company and American Stock Transfer & Trust Company, as Rights
Agent) at a purchase price of U.S.$6.25 per share (the "Per-
Share Purchase Price"), upon the terms and subject to the
conditions set forth herein.
2. The closing of the purchase and sale of the Shares
(the "Closing") shall take place at the offices of Wachtell,
Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York
10017 at 10:00 a.m., New York City time, after the later of
(the "Closing Date"): (i) the third New York Stock Exchange,
Inc. ("NYSE") trading day ("NYSE Trading Day") after the date
the Company accepts this Agreement in writing; or (ii) the
first NYSE trading day after the date on which all of the
conditions set forth in paragraphs 4 and 5 of this Agreement
shall have been satisfied or waived. At the Closing, the
Purchaser shall deliver to the Company (by wire transfer in
U.S. dollars to an account to be designated in writing by the
Company to the Purchaser) the Aggregate Purchase Price (as
hereinafter defined) in same-day funds. The "Aggregate
Purchase Price" shall be equal to (a) the number of Shares
agreed to be purchased by the Purchaser pursuant to this
Agreement, multiplied by (b) the Per-Share Purchase Price, all
as set forth in paragraph 1 of this Agreement. Following
receipt of the Aggregate Purchase Price, at the Closing the
Company shall deliver to the Purchaser, or its designee,
representative or account, one or more stock certificates,
registered on the Company's stock transfer books in the name of
the Purchaser (or a depository account for the benefit of the
Purchaser) as set forth on the signature page of this
Agreement.<PAGE>
3. The Purchaser hereby makes the following representa-
tions, warranties and covenants to the Company:
(i) The Purchaser has the requisite power and
authority to enter into and perform this Agreement, the
execution and delivery of this Agreement by the Purchaser
and the consummation by it of the transactions
contemplated hereby have been duly authorized by all
necessary action, and no further consent or authorization
of the Purchaser is required. This Agreement has been
duly executed and delivered by the Purchaser and upon
acceptance of this Agreement by the Company, this
Agreement constitutes a valid and binding obligation of
the Purchaser enforceable against the Purchaser in
accordance with its terms.
(ii) The execution, delivery and performance of this
Agreement by the Purchaser and the consummation by the
Purchaser of the transactions contemplated hereby or
relating hereto do not and will not (a) result in the vio-
lation of any provision of the Purchaser's organizational
documents or (b) conflict with, or constitute a default
(or an event which with notice or lapse of time or both
would become a default) under, any agreement, indenture or
instrument to which the Purchaser is a party, or result in
a violation of any law, rule, regulation, order, judgment
or decree of any court or governmental agency applicable
to the Purchaser or its properties. The Purchaser is not
required to obtain any consent, authorization or order of,
or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or
perform any of its obligations under this Agreement or
purchase the Shares in accordance with the terms hereof.
(iii) The Purchaser has available and will have
available as of the Closing Date funds in the amount of
the Aggregate Purchase Price sufficient to purchase the
Shares pursuant to this Agreement.
(iv) The Purchaser has not received from the Company
or any other source (including Muzinich & Co., as
Placement Agent), any material non-public information
concerning the Company or its operations. In purchasing
the Shares, the Purchaser confirms that it is relying
solely upon the Company's Prospectus Supplement (including
the accompanying Prospectus dated September 5, 1995), as the
same may be amended from time-to-time prior to the Closing
(collectively, the "Prospectus") to be delivered to the
Purchaser by the Company pursuant to this Agreement, the
documents incorporated by reference in the Prospectus, and
other documents publicly filed by the Company with the
United States Securities and Exchange Commission (the
"SEC"). The Purchaser's knowledge and experience in
financial and business matters is such that it is capable
- 2 -<PAGE>
of evaluating the risks of the investment in the Shares
and in making its decision to purchase the Shares hereby
subscribed for, it has relied upon the independent
investigations made by it and, to the extent believed by
it to be appropriate, its representatives, including its
own professional, tax and other advisors.
(v) The Shares to be acquired by the Purchaser
pursuant to this Agreement are being acquired for its own
account in the ordinary course of the Purchaser's business
and with no intention of distributing or reselling the
Shares or any part thereof in any transaction which would
be in violation of the securities laws of the United
States of America or any State. The Purchaser is not a
"broker-dealer" as defined under United States federal
securities laws. If the Purchaser should in the future
decide to dispose of any of the Shares, the Purchaser
understands and agrees that it may do so only in com-
pliance with the United States Securities Act of 1933, as
amended (the "Act"), as then in effect. The Purchaser is
not an "underwriter" as defined in the Act.
(vi) The Purchaser hereby further represents and
warrants that it is an "Accredited Investor" (as such term
is defined in Rule 501 of Regulation D under the Act).
4. Upon acceptance of this Agreement, the Company makes
the following representations, warranties and covenants to the
Purchaser:
(i) The Company has the requisite power and
authority to enter into and perform this Agreement, the
execution and delivery of this Agreement by the Company
and the consummation by it of the transactions
contemplated hereby have been duly authorized by all
necessary action, and no further consent or authorization
of the Company is required.
(ii) The execution, delivery and performance of this
Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby or
relating hereto do not and will not (a) result in the vio-
lation of any provision of the Company's organizational
documents or (b) conflict with, or constitute a default
(or an event which with notice or lapse of time or both
would become a default) under, any agreement, indenture or
instrument to which the Company is a party, or result in a
violation of any law, rule, regulation, order, judgment or
decree of any court or governmental agency applicable to
the Company or its properties, subject to the filing of
the Prospectus Supplement with the Commission, the
approval by the NYSE of the listing of the Shares and, to
the extent required, filings with any State securities
- 3 -<PAGE>
commission or pursuant to any "Blue Sky" laws or
regulations.
(iii) Prior to the Closing, the Company will file
the Prospectus Supplement (including any amendments
thereto) with the SEC and deliver a copy of the Prospectus
to the Purchaser accompanied by an executed copy of this
Agreement and wire transfer instructions regarding
delivery of the Aggregate Purchase Price at the Closing.
As of the Closing Date, neither the Prospectus, nor any
amendments thereto, nor any documents incorporated by
reference therein, will include any untrue statement of a
material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(iv) When paid for in accordance with the terms of
this Agreement, the Shares shall be validly issued, fully
paid and nonassessable.
5. The obligation hereunder of the Company to sell the
Shares to the Purchaser, is subject to the satisfaction, at or
before the Closing, of each of the following conditions set
forth below. These conditions are for the Company's sole
benefit and may be waived by the Company at any time in its
sole discretion.
(i) The representations and warranties of the Pur-
chaser shall be true and correct as of the date when made
and as of the Closing Date as though made at that time.
(ii) The Purchaser shall have performed, satisfied
and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Purchaser at
or prior to the Closing.
(iii) No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been
enacted, entered or promulgated by any court of gov-
ernmental authority or governmental agency of competent
jurisdiction which prohibits the consummation of any of
the transactions contemplated by this Agreement.
(iv) The issuance of the Shares shall have been
approved by the NYSE subject to official notice of
issuance.
(v) On the Closing Date, no stop order or similar
restraining order shall have been entered by the SEC or
proceeding for that purpose initiated or any state securi-
ties administrator prohibiting the sale of the Shares
pursuant to this Agreement.
- 4 -<PAGE>
(vi) The Company shall have received Subscription
Agreements, including this Agreement, representing
commitments to purchase shares of Common Stock with
Aggregate Purchase Prices under all such Subscription
Agreements totalling at least U.S.$22 million and each
Subscription Agreement shall be in full force and effect
and each of the purchasers thereunder shall be prepared to
fund its commitment thereunder.
6. The obligation of the Purchaser hereunder to acquire
and pay for the Shares is subject to the satisfaction, at or
before the Closing, of each of the following conditions set
forth below. These conditions are for the Purchaser's sole
benefit and may be waived by such Purchaser at any time in its
sole discretion.
(i) The representations and warranties of the
Company shall be true and correct as of the date when made
and as of the Closing Date as though made at that time
(except for representations and warranties that speak as
of a particular date).
(ii) The Company shall have performed, satisfied and
complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or
prior to the Closing.
7. (i) This Agreement, may be terminated at any time by
the mutual written consent of the Company and the Purchaser.
(ii) This Agreement may be terminated by action of
the Purchaser and/or the Company at any time after March 7,
1997 if the sale of the Shares shall not have been consummated
by such date.
(iii) This Agreement may be terminated by action
of the Purchaser if any one or more of the conditions set forth
in paragraph 5 of this Agreement has not been fulfilled as of
the Closing Date.
(iv) This Agreement may be terminated by action of
the Company if any one or more of the conditions set forth in
paragraph 6 of this Agreement has not been fulfilled as of the
Closing Date.
8. Each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance
of this Agreement.
9. The Company and the Purchaser acknowledge and agree
that irreparable damage would occur in the event that any of
- 5 -<PAGE>
the provisions of this Agreement were not performed in
accordance with their specific terms or are otherwise breached
and that the Company and/or the Purchaser would not have an
adequate remedy at law. It is accordingly agreed that the par-
ties shall be entitled to an injunction or injunctions to pre-
vent or cure breaches of the provisions of this Agreement and
to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which either of them
may be entitled by law or equity.
10. This Agreement contains the entire understanding of
the parties with respect to the matters covered hereby,
supersedes any and all prior or contemporaneous, written or
oral agreements or undertakings with respect thereto and,
except as specifically set forth herein, neither the Company
nor the Purchaser makes any representation, warranty, covenant
or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended other than by a written
instrument signed by the party against whom enforcement of any
such amendment or waiver is sought.
11. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall
be effective (a) upon receipt by hand delivery, telecopy or
facsimile at the address or number designated below or (b) on
the second NYSE Trading Day following the date of mailing by
express courier service, fully prepaid, addressed to such ad-
dress, or upon actual receipt of such mailing, whichever shall
first occur. The addresses for such communications shall be:
If to the Company:
Hecla Mining Company
6500 Mineral Drive
Coeur d'Alene, Idaho 83814
Telecopy: (208) 769-7612
Attention: John P. Stilwell
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telecopy: (212) 403-2000
Attention: David A. Katz, Esq.
If to the Purchaser, at the address and telecopy
number set forth on the signature page of this Agreement.
12. No waiver by either party of any default with respect
to any provision, condition or requirement of this Agreement
shall be deemed to be a continuing waiver in the future or a
waiver of any other provision, condition or requirement hereof;
- 6 -<PAGE>
nor shall any delay or omission of either party to exercise any
right hereunder in any manner impair the exercise of any such
right accruing to it thereafter.
13. Upon execution of this Agreement by the Company, this
Agreement and all representations, warranties, covenants and
agreements contained in this Agreement shall be binding upon
and inure to the benefit of the parties and their successors
and assigns. The parties hereto may amend this Agreement
without notice to or the consent of any third party. Neither
the Company nor the Purchaser shall assign this Agreement or
any rights or obligations hereunder without the prior written
consent of the other (which consent may be withheld for any
reason, no reason, or an unreasonable reason, in the sole
discretion of the party from whom consent is sought). The
assignment by a party of this Agreement or any rights hereunder
shall not affect the obligations of such party under this
Agreement. The term "successor and assigns" as used in this
Agreement shall not include any purchaser, as such purchaser,
of the Shares from the Purchaser.
14. This Agreement is intended for the benefit of the
parties hereto and their respective permitted successors and
assigns exclusively and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
15. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of
New York without regard to the principles of conflict of laws.
Each of the parties hereto, and their respective permitted
successors and assigns, agrees to submit to the jurisdiction of
the state and federal courts located in the State of New York
in any action or proceeding arising out of or related to this
Agreement. THE PARTIES HERETO WAIVE THEIR RIGHT TO A JURY
TRIAL WITH RESPECT TO DISPUTES HEREUNDER.
16. The provisions set forth in this Agreement (other
than the provisions set forth in paragraphs 1 and 2 hereof) and
any other document referred to in this Agreement are severable.
If any provision of this Agreement, or any other document
referred to in this Agreement, is held to be invalid or
unenforceable in any jurisdiction by any court of governmental
authority or governmental agency of competent jurisdiction, the
remaining provisions of this Agreement and any other document
referred to in this Agreement, shall not be affected thereby,
and shall remain valid and enforceable in such jurisdiction,
and any such invalidity or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in
any other jurisdiction.
17. This Agreement may be executed in counterparts, each
of which together shall be deemed to be an original, and both
of which together shall be considered one and the same
agreement and shall become effective when counterparts have
- 7 -<PAGE>
been signed by each party and delivered to the other party, it
being understood that both parties need not sign the same
counterpart. In the event any signature is delivered by
facsimile transmission, the party using such means of delivery
shall cause four additional executed signature pages to be
physically delivered to the other party within two NYSE Trading
Days of the execution and delivery hereof.
- 8 -<PAGE>
The Purchaser has caused this Agreement to be duly
executed by its authorized officers as of the date first above
written. If this Agreement is acceptable to the Company,
please acknowledge your agreement and acceptance below and
return a copy to the Purchaser as provided herein.
Name of Purchaser:
_________________________________________
By: _____________________________________
Name:
Title:
Name:
Title:
Address of Purchaser:
________________________________________
________________________________________
________________________________________
Name to be used on Common
Stock Certificate:
________________________________________
Address:
________________________________________
________________________________________
________________________________________
Agreed and Accepted as of
this 19th day of February, 1997:
HECLA MINING COMPANY
By:
John P. Stilwell
Chief Financial Officer
- 9 -
