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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
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FORM 8-K/A
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report
(Date of earliest event reported): June 25, 1999
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 83815-8788
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(Address of principal executive offices) (Zip Code)
(208) 769-4100
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(Registrant's Telephone Number)
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Item 2. Acquisition or Disposition of Assets
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See Item No. 5.
Item 5. Other Events.
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On June 28, 1999 the Registrant issued the press release, which is
incorporated herein by this reference relating to the Registrant's
closing of the purchase of all outstanding common stock of Monarch
Resources Investments Limited on June 25, 1999.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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Exhibit 4.1 - Purchase Agreement between Monarch Resources
Limited and Hecla Mining Company dated May 17, 1999
Exhibit 99 - News Release dated June 28, 1999 (filed previously)
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/ Michael B. White
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Name: Michael B. White
Title: Vice President - General Counsel
Dated: July 12, 1999
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EXHIBIT INDEX
Exhibit No. Title
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4.1 Purchase Agreement between Monarch Resources Limited
and Hecla Mining Company dated May 17, 1999
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Exhibit 4.1
PURCHASE AGREEMENT
BETWEEN
MONARCH RESOURCES LIMITED
AND
HECLA MINING COMPANY
May 17, 1999
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TABLE OF CONTENTS
ARTICLE 1 INTERPRETATION
1.1 Definitions
1.2 Other Words, Phrases and Descriptions
1.3 Headings
1.4 Currency
1.5 Time
1.6 Knowledge and Awareness
1.7 Gender and Number
1.8 Schedules
1.9 Interpretation of Agreement
ARTICLE 2 PURCHASE OF PURCHASED ASSETS
2.1 Purchase and Sale
2.2 Purchase Price
2.3 Payment of Purchase Price
2.4 Post-Closing Adjustment
2.5 Venezuelan IVM Tax Refund
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE VENDOR
3.1 Representations and Warranties of the Vendor
3.2 Survival of Representations and Warranties
3.3 Limitations on Warranty Claims
ARTICLE 4 REPRESENTATIONS, WARRANTIES OF THE PURCHASER
4.1 Representations and Warranties of the Purchaser
4.2 Survival of Representations and Warranties
4.3 Limitations on Warranty Claims
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ARTICLE 5 INTERIM PERIOD
5.1 Conduct of Business - Advisory Committee
5.2 Access
5.3 Confidentiality
5.4 Non-Solicitation
5.5 Registration and Listing of the Hecla Shares
5.6 Trading Limitation of Purchased Shares
ARTICLE 6 CONDITIONS OF CLOSING
6.1 Conditions to the Obligations of the Purchaser
6.2 Waiver or Termination by Purchaser
6.3 Conditions to the Obligations of the Vendor
6.4 Waiver or Termination by Vendor
ARTICLE 7 CLOSING
7.1 Vendor's Deliveries
7.2 Purchaser's Deliveries
7.3 Place of Closing
7.4 Closing Procedure
7.5 Return of Data
ARTICLE 8 GENERAL
8.1 Cross-Indemnity
8.2 Vendor's Indemnity
8.3 Indemnity Limitations
8.4 Provisions Relating to Indemnity Claims
8.5 Further Assurances
8.6 Notice
8.7 Amendment or Variation
8.8 Expenses
8.9 Counterparts
8.10 Assignment
8.11 Entire Agreement
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PURCHASE AGREEMENT
THIS AGREEMENT is made as of the 17th day of May 1999.
BETWEEN:
MONARCH RESOURCES LIMITED, a corporation incorporated under the
laws of Bermuda (the "Vendor")
AND:
HECLA MINING COMPANY, a corporation incorporated under the laws
of Delaware U.S.A.
(the "Purchaser")
WITNESSES THAT WHEREAS:
A. The Vendor is the registered and beneficial owner of the Purchased
Shares (as hereinafter defined); and
B. The Purchaser wishes to purchase and the Vendor wishes to sell the
Purchased Shares on the terms and conditions contained herein;
NOW THEREFORE in consideration of the premises and the mutual
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which is acknowledged by the Vendor and the
Purchaser, the Vendor and the Purchaser warrant, represent, covenant and agree
as follows:
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ARTICLE 1
INTERPRETATION
1.1 Definitions: In this Agreement, unless the subject matter or context
requires otherwise:
"Business" means the business carried on by MRIL which comprises the
ownership, operation and administration of the Mine and the Exploration
Property;
"Business Day" means any day that is not a Saturday, a Sunday or a
statutory holiday in Ontario;
"Chattels" means all the personal property associated with the Business,
including but not limited to the personal property listed in Schedule "A";
"Closing Date" means such date as is agreed for the closing of the
transaction of purchase and sale between the Vendor and the Purchaser and
which is not more than 75 days after the date of this Agreement and,
failing agreement, which will be the day which is the 75th day after the
date of this Agreement;
"Encumbrances" means mortgages, charges, pledges, security interests,
liens, encumbrances, actions, claims, demands and equities of any nature
whatsoever or howsoever arising and any rights or privileges capable of
becoming any of the foregoing;
"Environmental Laws" means any laws relating, in whole or in part, to the
protection of human health or the protection and enhancement of the
environment, on-site or off-site contamination, the release of Hazardous
Substances or dealing with Hazardous Substances, occupational safety,
product liability, public health, public safety and transportation of
dangerous goods;
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"Exploration Property" means the mineral claims, concessions, and other
forms of mineral tenure located in Venezuela and Mexico, owned by the
Subsidiaries, all as more particularly described in Schedule "B".
"Financial Statements" means the unaudited financial statements of MRIL and
the audited financial statements of the Subsidiaries for the year ended
December 31, 1998 attached as Schedule "L" hereto;
"Governmental Body" means any domestic or foreign, national, federal,
provincial, state, municipal or other local government or body and any
division, agent, commission, board, or authority of any quasi-governmental
or private body exercising any statutory, regulatory, expropriation or
taxing authority under the authority of any of the foregoing, and any
domestic, foreign, international, judicial, quasi-judicial, arbitration or
administrative court, tribunal, commission, board or panel acting under the
authority of any of the foregoing;
"Hazardous Substances" means those contaminants, substances, pollutants,
wastes and special wastes which presently, or at any time prior to the
Closing Date, are regulated under any Environment Laws, or are hazardous,
toxic, or a threat to public health or to the environment, whether or not
defined as such under any applicable Environmental Laws including any
radioactive materials, asbestos, polychlorinated biphenyls;
"Hecla Shares" has the meaning ascribed to that term in Section 2.3;
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"Indemnified Party" means the party which has an Indemnity Claim;
"Indemnifying Party" means the party against whom an Indemnity Claim is
brought;
"Indemnity Claim" means a claim by either the Vendor or the Purchaser for
indemnification by the other pursuant to Section 8.1 or 8.2;
"Interim Period" means the period from and including the date of this
Agreement to and including the Time of Closing;
"Lands" means the interests in real property, mining property and other
tenements comprising the Business owned or held by MRIL or the
Subsidiaries, as more particularly described in Schedule "C";
"Local Laws" means the laws of the Republic of Venezuela and the laws of
Mexico.
"Material Adverse Effect" means a change which has or would have an
unfavorable effect on the Business the financial impact of which is or
would be greater than seventy five thousand dollars ($75,000).
"Material Contracts" means the material contracts and agreements
(including, without limitation, material royalty agreements and material
agreements pursuant to which any of the Lands are held or being acquired or
under which any other party is acquiring an interest) and all
modifications, extensions and renewals thereof, entered into by or binding
upon MRIL or relating to the Business, as more particularly described in
Schedule "D".
"Mine" means the underground gold mine known as "La Camorra" and described
in Schedule "B";
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"MRIL" means Monarch Resources Investments Limited, a corporation organized
and existing under the laws of Bermuda and, unless the context otherwise
requires, means Monarch Resources Investments Limited together with the
Subsidiaries;
"Order" means any control order, stop order, pollution abatement order,
pollution prevention order, remedial order, instruction, pollution control
order or other administrative complaint, direction, order or sanction
issued, filed or imposed by a Governmental Body pursuant to any
Environmental Laws;
"Permits" means the permits, licenses, approvals and other consents and
permissions necessary or required to carry on the Business;
"Permitted Encumbrances" means any of the following Encumbrances:
(a) Encumbrances for taxes, rates, assessments or governmental charges or
levies not at the time due or which total less than seventy five
thousand dollars ($75,000) in the aggregate and the validity of which
is being contested in good faith by appropriate proceedings;
(b) undetermined or inchoate Encumbrances incidental to current
construction or current operations, a claim for which shall not have
been registered or of which notice in writing shall not at the time
have been given pursuant to any mechanics lien or similar legislation
or any Encumbrance a claim for which, although registered or notice of
which, although given, relates to obligations not overdue or
delinquent which is shown on the Financial Statements or otherwise
disclosed to the Purchaser;
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(c) easements, rights of way, servitudes, prohibitions, limitations,
licences, or other similar rights in land granted to or reserved by
other persons which do not materially impair the usefulness of the
Businesses;
(d) all rights reserved to or vested in Corporacion Venezolana de Guayana,
a Venezuelan corporation owned by the government of the Republic of
Venezuela ("CVG"), the Ministry of Energy and Mines, a division of the
government of the Republic of Venezuela ("MEM"), and La Cuesta
International, S.A. de C.V., a Mexican corporation ("LCI") by the
terms of any lease, licence, franchise, grant or permit held by any
person or by any statutory provision to terminate any such lease,
licence, franchise, grant or permit or to require annual or other
periodic payments as a condition of the continuance thereof or to
distrain against or to obtain a charge on any property or assets of
the person in the event of failure to make any such annual or other
periodic payments;
(e) title defects or irregularities which are of a minor nature and
individually or in the aggregate will not materially impair the
usefulness of all or any substantial portion of the Property;
(f) such other Encumbrances listed in Schedule "E" hereto;
"Property" means, collectively, the Mine, the Exploration Property, the
Chattels, the Lands and the Rights;
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"Purchase Price" has the meaning ascribed thereto in Section 2.2;
"Purchased Shares" means all of the issued and outstanding shares in the
capital of MRIL and described in Schedule "F";
"Purchaser's Attorneys" means Michael B. White, Esq., Purchaser's Vice
President - General Counsel, and, as to securities laws issues relating to
issuance and resale of the Hecla Shares, means Ballard, Spahr, Andrews &
Ingersoll;
"Rights" means all right, title and interest of MRIL in and to the Material
Contracts, the Permits, bank accounts, and any intellectual property owned
or used by MRIL in connection with the Business;
"Royalty Agreement" means the royalty agreement substantially in the form
attached hereto as Appendix 2 pursuant to which the Purchaser will grant to
the Vendor on the Closing Date the royalties specified therein;
"Subscription Agreement" means the share subscription agreement
substantially in the form attached hereto as Appendix 1 pursuant to which
the Hecla Shares will be issued to the Vendor on the Closing Date;
"Subsidiaries" means Monarch Minera Suramericana, C.A., a corporation
organized and existing under the laws of Venezuela and Monarch Resources de
Mexico, S.A. de C.A., a corporation organized and existing under the laws
of Mexico.
"Third Party Liability" means a claim made against either the Purchaser,
MRIL or the Vendor after the Closing Date for which the Purchaser or the
Vendor, as applicable, may be entitled to indemnity by the other under this
Agreement;
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"Time of Closing" means 11:00 a.m. (Toronto time) on the Closing Date or
such other time as the parties shall agree to;
"Vendor's Attorneys " means Appleby, Spurling & Kempe in Bermuda and Fasken
Campbell Godfrey in Canada; and
"Warranty Claim" means a claim made by either the Purchaser or the Vendor
based on or with respect to the inaccuracy or non-performance, non-
fulfilment or breach of any representation or warranty made by the other
party contained in this Agreement or contained in any document or
certificate given in order to carry out the transactions contemplated
hereby.
1.2 Other Words, Phrases and Descriptions: In this Agreement, unless otherwise
expressly provided:
(a) "this Agreement", "hereof", "hereunder" and similar expressions refer
to this purchase agreement, as it may from time to time be
supplemented or amended, and where applicable, to an appropriate
Schedule or Schedules hereto, and to any particular Article, Section,
Subsection or other portion hereof and include any agreement or
instrument supplemental or ancillary hereto;
(b) all references to designated "Articles", "Sections", "Subsections",
"Schedules" and other subdivisions are to the designated Articles,
Sections, Subsections, Schedules and other subdivisions of this
Agreement; and
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(c) the word "including", when following any general statement, term or
matter, is not to be construed to limit such general statement, term
or matter to the specific items or matters set forth immediately
following such word or to similar items or matters, whether or not
non-limiting language (such as "without limitation" or "but not
limited to" or words of similar import) is used with reference
thereto, but rather is to be construed to refer to all other terms or
matters that could reasonably fall within the broadest possible scope
of such general statement, term or matter.
1.3 Headings: The headings and the division of this Agreement into Articles,
Sections, Subsections or other subdivisions are for convenience of reference
only and are not intended to interpret, define or limit the scope, extent or
intent of this Agreement or any provision hereof.
1.4 Currency: All references to currency mean lawful money of the United
States of America and all amounts to be paid or calculated pursuant to this
Agreement are to be paid or calculated in lawful money of the United States of
America unless otherwise stated.
1.5 Time: Time will be of the essence of this Agreement and every part hereof
and no extension or variation of this Agreement will operate as a waiver of this
provision.
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1.6 Knowledge and Awareness: Any reference herein to "the knowledge" or "the
awareness" of the Vendor will be deemed to mean the actual knowledge of Hans
Rheinheimer, President of the Vendor; Lester Knight, Chief Financial Officer of
the Vendor; Jose Luis Joves, General Manager of Monarch Minera Suramericana;
C.A., Peter Morton, General Manager of the Mine; David Howe, Chief Geologist of
the Mine; and Peter MacLean, Senior Geologist of the Mexico Exploration
Property.
1.7 Gender and Number: Words importing any gender include the masculine,
feminine and neuter gender. Words in the singular include the plural and vice
versa. Words importing persons include individuals, partnerships, associations,
trusts, unincorporated organizations and corporations and vice versa.
1.8 Schedules: The following Schedules and Appendices annexed hereto form
part of this Agreement and are incorporated herein by reference:
Schedule "A" - Chattels (to be delivered at closing)
Schedule "B" - Mine/Exploration Property
Schedule "C" - Lands
Schedule "D" - Material Contracts
Schedule "E" - Permitted Encumbrances
Schedule "F" - Purchased Shares
Schedule "G" - Vendor Approvals
Schedule "H" - Purchaser Approvals
Schedule "I" - Claims and Potential Claims
Schedule "J" - Employees and Collective Agreements
Schedule "K" - Bank Accounts
Schedule "L" - Financial Statements
Schedule "M" - Directors, Officers and Employees
Schedule "N" - March 31, 1999 Unaudited Balance Sheet of MRIL
Appendix 1 - Subscription Agreement
Appendix 2 - Royalty Agreement
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1.9 Interpretation of Agreement: The following rules will be applied in
interpreting this Agreement:
(a) this Agreement will inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns, as the
case may be;
(b) if any provision of this Agreement is declared or found to be invalid,
illegal or unenforceable, in whole or in part, it will be severable
from this Agreement to the extent of such invalidity, illegality or
unenforceability and the remainder of this Agreement will be
construed as if such invalid, illegal or unenforceable provision had
been deleted from this Agreement; and
(c) this Agreement and all matters arising hereunder, except with respect
to matters arising pursuant to the Subscription Agreement, Appendix 1
to this Agreement, and the Royalty Agreement, Appendix 2 to this
Agreement, will be governed by and construed in accordance with the
laws of Ontario and the laws of Canada applicable therein. All
disputes arising under this Agreement will be referred to the courts
of competent jurisdiction of Ontario and the Vendor and the Purchaser
hereby attorn to the jurisdiction of courts of competent jurisdiction
of Ontario.
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ARTICLE 2
PURCHASE OF PURCHASED ASSETS
2.1 Purchase and Sale: The Vendor hereby agrees to sell, assign and transfer
the Purchased Shares to the Purchaser and the Purchaser hereby agrees to
purchase the Purchased Shares, all in accordance with and subject to the terms
and conditions set forth in this Agreement.
2.2 Purchase Price: The price (the "Purchase Price") payable by the Purchaser
to the Vendor for the Purchased Shares will be $25,000,000, plus the rights to
be assigned to the Vendor pursuant to Section 2.5.
2.3 Payment of Purchase Price: The Purchase Price will be paid by the Purchaser
as follows:
(a) $9,000,000 shall be paid in cash by certified check or by electronic
transfer of funds to the Vendor or its nominee at the Time of Closing;
and
(b) $16,000,000 shall be paid by the delivery to the Vendor at the Time of
Closing of a share certificate in the name of the Vendor or its bare
nominee representing the valid issuance to the Vendor of such number
of $0.25 par value common shares in the capital of the Purchaser
having a value of $16,000,000 based on the weighted average closing
price of the Purchaser's common shares on the New York Stock Exchange
during the 20 consecutive trading days immediately preceding the last
Business Day prior to the Closing Date (the "Hecla Shares"), all in
accordance with the Subscription Agreement.
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2.4 Post-Closing Adjustment. The Purchase Price set forth in Section 2.2 is
based upon the Net Assets (as hereinafter defined) of MRIL as reflected on the
unaudited balance sheet as of March 31, 1999 (the "March 31, 1999 Balance
Sheet") furnished by Vendor, a copy of which is included in Schedule "N",
attached hereto. The parties shall determine and make adjustment for any
difference in Net Assets as of March 31, 1999, and the Net Assets as of the
Closing Date as reflected on the Final Balance Sheet (as defined below) as
follows:
(a) Final Balance Sheet. Within twenty (20) days after the Closing
Date, Vendor shall furnish to Purchaser a balance sheet as of the
Closing Date (the "Closing Date Balance Sheet") prepared by Vendor in
a manner consistent with the March 31, 1999 Balance Sheet, and
shall make available all work papers, schedules, and documents
which were used or developed to arrive at the conclusions set
forth in the Closing Date Balance Sheet. The Purchaser shall have
twenty (20) days after receipt of the Closing Date Balance Sheet to
notify the Vendor that it wishes to have the Closing Date Balance
Sheet reviewed by independent accountants designated by the
Purchaser. If the Purchaser does not give such notice, the Closing
Date Balance Sheet shall be the "Final Balance Sheet" for all purposes
hereunder. If the Purchaser gives such notice, it shall cause its
independent accountants at Purchaser's expense to complete its review
and submit a report to the Vendor and the Purchaser within thirty
(30) days, and shall make available all work papers, schedules, and
documents which were developed to arrive at the conclusions set forth
in such report. The Vendor shall
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have twenty (20) days after receipt of such report during which to
advise the Purchaser that it disputes such report. If the Vendor does
not give such notice, the Closing Date Balance Sheet as modified by
such report shall be the "Final Balance Sheet" for all purposes
hereunder. If the Vendor gives such notice, the Purchaser and the
Vendor shall use their best efforts in good faith to resolve such
dispute by negotiation. If such dispute is not resolved by
negotiation, the dispute shall be submitted as promptly as practicable
to a final review firm of Certified Public Accountants, which shall be
an impartial independent accounting firm of nationally recognized
standing selected jointly by the Purchaser and the Vendor. The
decision of such final review firm, shall be the "Final Balance Sheet"
for purposes of this Agreement. The cost of any such final audit or
review hereunder shall be borne equally by the parties. The parties
agree that the Closing Date Balance Sheet and Final Balance Sheet
shall be prepared in accordance with Canadian generally accepted
accounting principles consistently applied.
(b) Post-Closing Payment. By the tenth day after the determination of the
Final Balance Sheet, the parties shall hold a post-closing, either by
mail, telephone or in person, at a mutually agreeable location and
date (the "Post-Closing Date"). On the Post-Closing Date, the parties
shall determine the Net Assets of MRIL on the Closing Date as
reflected on the Final Balance Sheet. If there is a difference of
more than fifty thousand dollars ($50,000) between the Net Assets on
the Final Balance Sheet and the Net Assets set forth in the March 31,
1999 Balance Sheet, the Vendor or the Purchaser, as the case may be,
shall pay the entire amount of such difference as an adjustment to the
other party by wire or interbank transfer of
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immediately available federal funds within three (3) Business Days
following the Post-Closing Date.
(c) Net Assets. The term "Net Assets" of MRIL shall mean the value of
MRIL's total assets excluding property, plant and equipment and
accumulated depreciation, and excluding the value added tax effect,
minus the value of MRIL's total liabilities (excluding intercompany
payables/receivables), all as reflected on the March 31, 1999 Balance
Sheet attached hereto as Schedule "N", or on the Final Balance Sheet.
2.5 Venezuelan IVM Tax Refund. On the Closing Date, the Purchaser shall cause
MRIL to assign to the Vendor a one-half interest in and to any proceeds realized
from the refund, if any, of unrecorded tax inputs paid by Vendor to the
government of Venezuela for Impuestos al Consumo Suntuario y Ventas a Mayor
("IVM") from January 1, 1998 and prior to the Closing Date. The parties
anticipate that an appeal through the courts of Venezuela may be necessary to
realize the refund, and the date of completion of the process cannot be
accurately predicted. Prior to the Closing Date, the Advisory Committee
established pursuant to Section 5.1 of this Agreement shall be consulted
regarding the resolution of this matter. After the Closing Date, Purchaser
shall cause MRIL diligently to pursue this matter to its conclusion, and Vendor
shall cooperate with Purchaser therein. All Purchaser's costs associated with
resolution of this matter shall be deducted from the proceeds of any refund
prior to the division thereof, and Purchaser shall consult with Vendor to cause
Vendor's share of such refund to be distributed in a tax efficient manner
acceptable to both Purchaser and Vendor, acting reasonably.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE VENDOR
3.1 Representations and Warranties of the Vendor: The Vendor represents and
warrants to the Purchaser as follows, and acknowledges that the Purchaser is
relying upon the following representations and warranties in connection with its
purchase of the Purchased Shares:
(a) Incorporation and Existence. The Vendor, MRIL and each of the
Subsidiaries each is a corporation duly incorporated and validly
existing in all respects under the laws of its jurisdiction of
incorporation. MRIL and each of the Subsidiaries have, or at the Time
of Closing will have, the requisite corporate power and authority to
carry on its Business and to own its Property.
(b) Action by Vendor's Board of Directors. The Board of Directors of the
Vendor has duly adopted a resolution approving the transactions
contemplated by this Agreement and, subject to its fiduciary duties,
will recommend that the Vendor's shareholders approve the transactions
contemplated by this Agreement.
(c) Validity of Agreement.
(i) Subject to receipt of shareholder approval the Vendor has all
necessary corporate power and authority to enter into and perform
its obligations under this Agreement.
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(ii) The execution, delivery and performance by the Vendor of this
Agreement and the consummation of the transactions contemplated
herein has been duly authorized by all necessary corporate action
on the part of the Vendor subject to the receipt of shareholder
approval. The Vendor will use its reasonable efforts, having
regard to the fiduciary duties of its directors; to obtain the
approval of its shareholders for the transactions contemplated
herein.
(iii) This Agreement constitutes a legal, valid and binding obligation
of the Vendor and is enforceable against the Vendor in accordance
with its terms, subject to:
A. any applicable bankruptcy, insolvency, winding-up,
reorganization, arrangement, moratorium or other similar
laws affecting creditors' rights generally;
B. the general principles of equity, including the fact that
equitable remedies may only be awarded in the discretion of
a court; and
C. the approval of the Vendor's shareholders.
(d) Contractual and Regulatory Approvals. Except as disclosed in Schedule
"G", the Vendor is under no obligation, contractual or otherwise, to
request or obtain the consent of any person, and no permits, licenses,
certifications, authorizations or approvals of, or notifications to,
any Governmental Body, shareholder or other person are required to be
obtained by the Vendor:
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(i) in connection with the execution, delivery or performance by the
Vendor of this Agreement or the completion of any of the
transactions contemplated herein;
(ii) to avoid the cancellation, loss or delay in the granting of any
Permit which is material to the Business by reason of the
completion of the transactions contemplated herein; or
(iii) in order that the authority of MRIL to carry on its Business
in the ordinary course and in the same manner as presently
conducted remains in good standing and in full force and effect
as of and following the closing of the transactions contemplated
herein.
(e) Good Standing. MRIL and each of the Subsidiaries will at the Time of
Closing be duly licensed, registered, and qualified and in good
standing as a corporation under the laws of those jurisdictions where
the Business is currently carried on.
(f) MRIL Equity Holdings. At the Time of Closing, MRIL will be the
beneficial owner of record of all outstanding shares in the capital of
the Subsidiaries with good marketable title thereto, free and clear of
all Encumbrances other than the Permitted Encumbrances. Other than
its equity interest in the Subsidiaries, at the Time of Closing, MRIL
will have no equity interest in and will not control, through stock
ownership or otherwise, any corporation, partnership, joint venture or
other business entity and the Subsidiaries will have no equity
interest in and will not control, through stock ownership or
otherwise, any corporation, partnership, joint venture or other
business entity.
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(g) No Conflicts. The execution and delivery of this Agreement, the
consummation of the transactions among the parties contemplated hereby
and the due observance and performance by the Vendor of its
obligations herein:
(i) will not conflict with or result in a breach of or violate any
of the terms, conditions or provisions of the constating
documents or by-laws or any directors' or shareholders'
resolution of the Vendor or MRIL;
(ii) will not conflict with or result in a breach of or violate any of
the terms, conditions or provisions of any law, judgment, order,
injunction, decree, regulation or ruling of any court or
Governmental Body to which the Vendor or MRIL is subject; and
(iii) will not violate or conflict with or result in a breach of any
provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default)
under any Material Contract which individually or in the
aggregate would have a Material Adverse Effect.
(h) Vendor's Title to Purchased Shares. The Purchased Shares are owned
by the Vendor as the beneficial owner of record, with good and
marketable title thereto, free and clear of all Encumbrances. The
Vendor has the full power and authority to sell, transfer and assign
to the Purchaser the Purchased Shares and to vest in the Purchaser a
good, valid and subsisting title in and to the Purchased Shares, free
and clear of all Encumbrances. No person has any agreement or option
or any right or privilege (whether by law, pre-emptive or contractual)
capable of becoming an agreement or option for:
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(i) the purchase, subscription, allotment or issuance of, or
conversion into, any of the unissued shares or other securities
of MRIL or any of the Subsidiaries;
(ii) the purchase from the Vendor or MRIL of any issued shares or
other securities of MRIL or any of the Subsidiaries, other than
the Purchaser as contemplated herein; or
(iii) the purchase or other acquisition from MRIL or any of the
Subsidiaries of any of its undertaking, property or assets, other
than in the ordinary course of business.
(i) Transfer of Purchased Shares. Upon payment of the Purchase Price by
the Purchaser pursuant to the provisions hereof, the Purchased Shares
will be duly sold and transferred to the Purchaser as fully paid and
non-assessable shares in the capital of MRIL.
(j) Land Titles.
(i) All of the interests in real property, mining properties other
than as set forth in Schedule "B" and other tenements comprising
the Business owned or held by MRIL are listed in Schedule "C",
and Schedule "C" is a materially complete and accurate
description of such interests.
(ii) MRIL is the legal and beneficial owner of the Lands free and
clear of all Encumbrances, except the Permitted Encumbrances.
<PAGE> 24
(k) Chattels. MRIL is the legal and beneficial owner of the Chattels free
and clear of all Encumbrances except Permitted Encumbrances.
(l) Permits. MRIL possesses all material Permits necessary or required to
own its Property and operate its Business as presently operated.
(m) Mine and Exploration Property.
(i) The Mine and the Exploration Property were duly, properly and
legally awarded to the Subsidiaries and all right, title and
interest thereto, save for those limitations provided by Local
Laws or in the mining rights, is fully, absolutely and
unconditionally vested in the Subsidiaries, subject only to
Permitted Encumbrances. All material procedures of Local Laws
applicable to mining matters and the award of mining rights have
been complied with in all material respects, by the Subsidiaries
in respect of the Mine and the Exploration Property. To the best
of Vendor's knowledge all fees, taxes, duties and other
applicable contributions under the mining laws of the relevant
jurisdiction and other Local Laws relative to mining claims have
been timely paid in respect of the Mine and the Exploration
Property, and all other requirements of Local Law or as set forth
in the titles to the Mine and the Exploration Property have been
complied with in all material respects and the Subsidiaries are
not in breach thereof.
<PAGE> 25
(ii) Schedule "B" contains a materially accurate description of the
Mine and the Exploration Property. To the best of Vendor's
knowledge none of the Subsidiaries has done or failed to do any
act or by omission or commission created any cause or grounds
which might result in the termination, resolution, rescission,
setting aside or avoidance of the Mine and the Exploration
Property. To the best of Vendor's knowledge, none of the
Subsidiaries has been served with notice or any other form of
communication from any Governmental Authority that any of the
Subsidiaries has failed to perform any duties, obligations,
charges or requirements, whether legal, contractual or
administrative, in connection with the Mine and the Exploration
Property. To the best of Vendor's knowledge there is no current
duty to exploit the Exploration Property, and the date upon which
any of the Subsidiaries is obligated to present feasibility
studies to the relevant Governmental Authority will not expire
prior to the closing of the transactions contemplated herein. To
the best of Vendor's knowledge the Subsidiaries are in material
compliance with the provisions contained in the titles to the
Mine and the Exploration Property with respect thereto.
(iii) To the best of Vendor's knowledge the Subsidiaries have
possession of materially unrestricted rights, other than as
provided by Local Law or in the titles to the Mine and the
Exploration Property, to use and enjoy all the licenses, permits,
registries, approvals and authorizations, which enable it to
hold, possess and explore the Mine and the Exploration Property.
<PAGE> 26
(n) Environmental Matters
(i) To the best of Vendor's knowledge there have been no past and
there are no current material violations by the Subsidiaries or
by any of its predecessors in title of any Environmental Law or
other law affecting or pertaining to the Mine and the Exploration
Property, nor any past creation of material damage or threatened
damage to the air, soil, surface waters, groundwater, flora,
fauna, or other natural resources on, about or in the general
vicinity of the Mine and the Exploration Property.
(ii) To the best of Vendor's knowledge, MRIL has not received any
notice indicating that the Property or any portion thereof or
any properties or interests previously owned or operated by MRIL
or the Subsidiaries does not comply with, or that MRIL or any of
the Subsidiaries is in violation of, any Environmental Laws, or
is subject to any proceeding, investigation, claim, lawsuit or
order of any Governmental Body.
(iii) There are no outstanding Orders issued to MRIL by any
Governmental Body relating to environmental matters requiring any
work, action, repair, construction or capital expenditures with
respect to the Property which have not been carried out, and MRIL
has not received, nor is the Vendor aware of, any notice of the
possibility of any of the same.
(o) Books and Records. All books and records of MRIL or the Subsidiaries
other than Monarch Minera Suramericana, C.A., are complete and
accurate in all material respects.
<PAGE> 27
(p) Financial Statements. The Financial Statements have been prepared in
accordance with Canadian generally accepted accounting principles
applied on a consistent basis during the period involved and fairly
and accurately reflect in all material respects the financial position
of MRIL and the results of operations and cash flows for the periods
covered therein. Since December 31, 1998, no sale, lease, abandonment
or other disposition of any Property other than in the ordinary course
of the Business has been made, nor has any transaction out of the
ordinary course of the Business been entered into by MRIL.
(q) Liabilities. There are no material obligations or liabilities of MRIL
which are not fully disclosed in the Financial Statements other than
intercompany debt which will be released prior to the Closing Date and
except those obligations or liabilities which individually or in the
aggregate would not have a Material Adverse Effect.
(r) Capital Expenditures. MRIL has not made any legal commitments to incur
any material capital expenditures in the future other than in the
ordinary course of Business, except with respect to the construction of
additions to the tailings dam and the development of the underground
ramp access at the Mine.
(s) Dividends, Indebtedness and Other Payments. Since the date of the
Financial Statements, MRIL has not declared or paid or made any
dividends or other distributions of profits or capital, incurred any
indebtedness to shareholders or made any payments out of the ordinary
course of the Business, or agreed to any of the foregoing (other than
incurring debt or making payments to shareholders in the ordinary
course of the Business).
<PAGE> 28
(t) Material Contracts. All Material Contracts and all modifications,
extensions and renewals thereof entered into by or binding upon MRIL or
the Business are listed in Schedule "D" other than those listed in
Schedule "J".
(u) Claims and Potential Claims. Except as disclosed in Schedule "I",
(i) there is no action, suit, arbitration, administrative hearing or
other proceeding by or before any Governmental Body in process or
to the knowledge of the Vendor pending or threatened against or
affecting MRIL that has or may have a Material Adverse Effect
including, without limitation, with respect to the Mine and
Exploration Property.
(ii) MRIL is not subject to any outstanding judgment, order or decree
entered in any lawsuit or proceeding before any Governmental
Body.
(v) No Judgments. None of the Subsidiaries is a party to or subject to
any judgment, order or decree entered in any action or proceeding
brought by any Governmental Body or any other party enjoining it in
respect of any business practice or the conduct of Business in any
area or the acquisition of any property.
(w) No Material Misstatement. All documents, reports or other written
information pertaining to this Agreement that have been furnished to
the Purchaser by or on behalf of the Vendor and MRIL were true and
correct in all material respects as of the date of the original
preparation and as at such date did not contain any material
misstatement of fact.
<PAGE> 29
(x) No Defaults. To the knowledge of the Vendor, MRIL is not in default
under or in breach of any Material Contract which would have a
Material Adverse Effect.
(y) Taxes. Except as disclosed in the Financial Statements and as noted
in the last sentence of this paragraph (y), to the knowledge of the
Vendor, MRIL has duly and in a timely manner filed all tax returns
required to be filed by it and has paid all taxes (including, without
limitation, income taxes, mining taxes, business taxes, municipal and
local improvement taxes and other such taxes, rates, levies and
assessments) which are due and payable, and has paid all assessments
and reassessments and all other taxes, governmental charges,
penalties, interest and fines due and payable by it on or before the
date hereof or has made adequate provision for taxes accrued. Other
than 1997 and 1998 Business Asset Tax filings in Venezuela, all tax
returns have been filed in accordance with all applicable laws and
regulations.
(z) Employees and Collective Agreements. Except as disclosed in Schedules
"D" and "J" or as required by Local Laws, MRIL is not a party to or
bound by any collective bargaining agreements, any agreements with a
trade union, any employee benefits or Pension or other employee
obligations or contracts with independent contractors which may be
deemed to be employees by Local Law which MRIL will be bound to
subsequent to Closing. MRIL has no officers or directors that are also
officers or directors of the Vendor who have not tendered their
resignations as of the Closing Date and subject only to the closing of
the transactions herein contemplated.
<PAGE> 30
(aa) Labor and Social Security Obligations. Each of the Subsidiaries has
complied in all material respects with and is or will be as of the
Closing Date in compliance in all material respects with all of their
obligations arising from local labor and social security laws and
their regulations, except Monarch Minera Suramericana, C.A. with
respect to social security obligations for which it entered into an
agreement with the Venezuelan Social Security Institute on November
25, 1998 for the payment of approximately Bs. 146,463,453 in past due
social security contributions. At the time of execution, the company
paid an initial installment of approximately Bs. 58,585,381 and agreed
to pay six (6) additional monthly installments of approximately Bs.
15,588,544 each, starting in March 1999.
(bb) Directors, Officers and Employees. Schedule "M" contains a full,
complete and accurate list of (i) all employees of each of MRIL and
the Subsidiaries as of the end of the last payroll period, which ended
on or about April 30, 1999, (ii) all directors and officers of MRIL
and the Subsidiaries, (iii) the names of all persons whose annual
base salary from MRIL and the Subsidiaries exceeds Fifty Thousand and
No/100 Dollars ($50,000), and (iv) the names of all persons holding
powers of attorney granted by either MRIL or any of the Subsidiaries,
and a summary statement of the terms thereof.
(cc) Bank Accounts. Schedule "K" contains a full, complete and accurate
list of each bank in which MRIL and the Subsidiaries has an account or
safe and the names of all persons entitled to draw thereon or to have
access thereto.
<PAGE> 31
(dd) Foreign Investment. MRIL has complied with applicable foreign
investment regulations under Local Law.
(ee) Non-Solicitation. For a period of five years commencing on the
Closing Date, the Vendor, hereby covenants and agrees not to call
upon any person who is, at the time, an employee of the Purchaser,
MRIL or any of the Subsidiaries for the purpose or with the intent
of enticing such employee away from or out of the employ of such
entity.
3.2 Survival of Representations and Warranties: Except as hereinafter
provided, the representations and warranties contained in Section 3.1 will
survive the Closing Date and will continue in full force and effect for the
benefit of the Purchaser for a period of one (1) year from the Closing Date,
after which such representations and warranties will be of no further force or
effect except in respect of claims made by the Purchaser within such one year
period. After the expiration of the one year period of time referred to above,
the Vendor will be released from all obligations and liabilities in respect of
the representations and warranties made by the Vendor and contained in this
Agreement or in any document or certificate given in order to carry out the
transactions contemplated hereby, except with respect to any claims made by the
Purchaser in writing prior to the expiration of such period, and subject to the
rights of the Purchaser to make any claim permitted by this Section.
3.3 Limitations on Warranty Claims: The Purchaser will not be entitled to make
a Warranty Claim if the Purchaser has been advised in writing, prior to May 8,
1999 by Vendor, of the inaccuracy, non-performance, non-fulfilment or breach or
if any such inaccuracy, non-performance, nonfulfillment or breach is described
in that certain letter dated April 28, 1999 from Danae Kritzler Flasz of the
Caracas, Venezuela law firm of Neher, von Siegmund, Rengifo
<PAGE> 32
& Diquez on behalf of Purchaser to Ing. Jose Luis Joves on behalf of Vendor,
which is the basis for such Warranty Claim and the Purchaser completes the
transactions contemplated herein notwithstanding such inaccuracy, non-
performance, non-fulfilment or breach.
ARTICLE 4
REPRESENTATIONS, WARRANTIES OF THE PURCHASER
4.1 Representations and Warranties of the Purchaser: The Purchaser represents
and warrants to the Vendor as follows and acknowledges that the Vendor is
relying upon the following representations and warranties in connection with its
sale of the Purchased Shares:
(a) Incorporation and Existence. The Purchaser is a corporation duly
incorporated, validly existing and in good standing under the laws of
its jurisdiction of incorporation.
(b) Validity of Agreements.
(i) The Purchaser has all necessary corporate power and authority to
enter into and perform its obligations under this Agreement, the
Subscription Agreement and the Royalty Agreement.
(ii) The execution, delivery and performance by the Purchaser of this
Agreement, the Subscription Agreement and the Royalty Agreement
and the consummation of the transactions contemplated herein will,
on the Closing Date, have been duly authorized by all necessary
corporate action on the part of the Purchaser.
<PAGE> 33
(iii) This Agreement, the Subscription Agreement and the Royalty
Agreement when executed by Purchaser, constitute legal, valid and
binding obligations of the Purchaser enforceable against the
Purchaser in accordance with their respective terms, subject to:
A. any applicable bankruptcy, insolvency, winding-up,
reorganization, arrangement, moratorium or other similar
laws affecting creditors' rights generally; and
B. the general principles of equity, including the fact that
equitable remedies may only be awarded in the discretion of
a court.
(c) Contractual and Regulatory Approvals. Except as disclosed in Schedule
"H", the Purchaser is not under any obligation, contractual or
otherwise, to request or obtain the consent of any person, and no
permits, licences, certifications, authorizations or approvals of, or
notifications to, any Governmental Body, shareholder or other person
are required to be obtained by the Purchaser in connection with the
execution, delivery or performance by the Purchaser of this Agreement,
the Subscription Agreement and the Royalty Agreement or the completion
of any of the transactions contemplated herein;
(d) Non-Contravention. Neither the execution, delivery and performance by
the Purchaser of this Agreement, the Subscription Agreement and the
Royalty Agreement nor the completion of the transactions contemplated
herein or therein will conflict with or result in a breach of or
default under:
<PAGE> 34
(i) any term or provision of any of the articles, by-laws or other
constating documents of the Purchaser; or
(ii) any agreement or other instrument or obligation to which the
Purchaser is a party or by which the Purchaser is bound.
(e) Litigation. At the date of this Agreement, there is no action, suit,
arbitration, judgment, litigation, investigation, proceeding, consent
decree, settlement agreement or cease trade order outstanding or, to
the knowledge of the Purchaser, pending or threatened against or
affecting the Purchaser which would prevent the Purchaser from
entering into this Agreement, the Subscription Agreement and the
Royalty Agreement and completing the transactions contemplated herein
or therein or which does or would restrict the trading of any of the
securities of the Purchaser.
(f) Hecla Shares. The Hecla Shares to be delivered to the Vendor at
Closing shall be duly authorized and validly issued and such shares
when issued will be fully paid and non-assessable. Subject to Section
5.5, the Hecla Shares shall not be registered under the Securities Act
of 1933 or any comparable state securities law and shall therefore be
held by the Vendor as restricted stock for investment purposes. Each
certificate for the Hecla Shares shall contain the following legend:
<PAGE> 35
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or
under the securities laws of any state or other jurisdiction
and may not be sold, offered for sale or otherwise
transferred unless registered and qualified under said Act
and applicable state's securities laws or unless Hecla
Mining Company received an opinion in acceptable form and
scope of counsel satisfactory to Hecla Mining Company that
registration, qualification or such other actions are not
required under any such laws."
4.2 Survival of Representations and Warranties: Except as hereinafter
provided, the representations and warranties contained in Section 4.1 will
survive the Closing Date and will continue in full force and effect for the
benefit of the Vendor for a period of one (1) year from the Closing Date, after
which such representations and warranties will be of no further force or effect
except in respect of claims made by the Vendor within such one year period.
After the expiration of the one year period of time referred to above, the
Purchaser will be released from all obligations and liabilities in respect of
the representations and warranties made by the Purchaser and contained in this
Agreement or in any document or certificate given in order to carry out the
transactions contemplated hereby except with respect to any claims made by the
Vendor in writing prior to the expiration of such period and subject to the
rights of the Vendor to make any claim permitted by this Section.
<PAGE> 36
4.3 Limitations on Warranty Claims: The Vendor will not be entitled to make a
Warranty Claim if the Vendor has been advised in writing, prior to the Time of
Closing of the inaccuracy, non-performance, non-fulfillment or breach which is
the basis for such Warranty Claim and the Vendor completes the transactions
contemplated herein notwithstanding such inaccuracies, non-performance, non-
fulfillment or breach.
ARTICLE 5
INTERIM PERIOD
5.1 Conduct of Business - Advisory Committee: Without limiting any other term
or condition of this Agreement, the Vendor and the Purchaser agree to establish
an advisory committee (the "Advisory Committee") to oversee, consult and advise
on (i) the conduct and management of the Business during the Interim Period;
(ii) the post-closing adjustment described in Section 2.4; and (iii) any other
matter agreed to by the Vendor and the Purchaser. The Advisory Committee shall
consist initially of Roger A. Kauffman on behalf of the Purchaser and Lester C.
Knight on behalf of the Vendor; but each Party may appoint an alternate
representative as it deems necessary. The Advisory Committee shall meet as
frequently as required for the purposes of this Article 5, and may meet in
person or by telephone conference call. The Advisory Committee shall be entitled
to obtain advice from and consult with such legal, financial and technical
advisors as may be appropriate in their discretion from time to time. Except as
specifically provided by this Agreement or with the prior written consent of the
Purchaser, at all times during the Interim Period the Vendor will cause MRIL to
in consultation with the Advisory Committee:
<PAGE> 37
(a) refrain from making or declaring any dividends or other distributions
of profits or capital or otherwise to shareholders;
(b) refrain from incurring any indebtedness from, or making any payments
on account of principal, interest or fees to the Vendor other than
incurring debt or making payments in the ordinary course of the
Business and consistent with past practice;
(c) refrain from selling, leasing, abandoning or otherwise disposing of
any of the Property, other than as provided in Section 6.1(k) and in
the ordinary course of the Business;
(d) refrain from altering its constating documents or by-laws or those of
the Subsidiaries or effecting any other corporate change in MRIL or
any of the Subsidiaries other than as expressly contemplated herein;
(e) refrain from knowingly violating any Permit or law or regulation
applicable to it;
(f) refrain from entering into (or renewing, extending or otherwise
amending) any material agreement or transaction relating to the
Property or the Business (including with respect to financing,
exploration, mining, milling, hedging or any other material
operational or financial aspect of the Business) other than agreements
or transactions made in the ordinary course;
(g) refrain from incurring debt by way of bank loans or similar methods;
<PAGE> 38
(h) otherwise operate the Business in the ordinary and normal course
thereof, consistent with past practices, and without entering into any
other transaction or incurring any obligation or liability that is out
of the ordinary course of the Business.
(i) renegotiate the employment terms and the resignations and releases to
be provided pursuant to Section 7.1 (c)
5.2 Access: The Purchaser through its authorized representatives, consultants
and agents will at all times after the date of this Agreement be given
reasonable access during MRIL's regular business hours to the Property
including, in particular, all financial, administrative, exploration,
operations, management files and documents relating to the Property and the
Business which are in the possession or control of the Vendor or MRIL, or any of
their employees, agents, consultants, advisors or other parties within their
control for planning and related purposes only and, for greater certainty, not
for due diligence purposes. The Vendor will use its best efforts to arrange
meetings, or cause MRIL to arrange meetings, between the Purchaser and such
employees, agents, consultants or advisors as the Purchaser may wish to
interview for the purpose of monitoring the Business and planning for its
ownership and operation after the Closing Date. The Purchaser will indemnify and
hold the Vendor harmless from any and all liabilities, actions, costs, damages
and liens arising from the entry of the Purchaser or its representatives,
consultants and agents on the Lands prior to the Closing Date and, if the sale
hereunder is not completed, the Purchaser will repair any damage to the Lands
arising from such entry. The Purchaser will use its best efforts to minimize
disturbance of or interference with the Business.
<PAGE> 39
5.3 Confidentiality: Except as provided herein, the Purchaser will cause its
directors, officers, consultants, advisors and agents to keep in confidence all
information, data and documentation provided by the Vendor with respect to MRIL,
the Property and the Business, until the Closing Date, except to the extent
necessary to complete the transactions contemplated herein and except as
required by law or regulation. The Purchaser shall ensure that its
representatives observe and perform these provisions. The Vendor and the
Purchaser agree that forthwith upon the execution of this Agreement they intend
to issue a joint press release with respect to this Agreement and the
transactions contemplated herein, the form, timing and contents of such press
release to be mutually agreed.
5.4 Non-Solicitation: Until the earlier of the Closing Date and the
termination of the parties' obligations under this Agreement, the Vendor agrees
that it will not solicit, initiate, entertain, accept or encourage inquiries,
submissions, proposals, bids or offers from any other person, entity or group
relating to, will not furnish to any other persons, entity or group any
information with respect to, and will not enter into any agreement with respect
to the direct or indirect acquisition or disposition of all or any of the
Purchased Shares or the Business (an "Alternative Transaction").
Notwithstanding any provision of this Agreement to the contrary, nothing
contained in this Agreement will prohibit, enjoin or otherwise restrict the
board of directors of the Vendor from supporting or facilitating any Alternative
Transaction that is proposed prior to June 22, 1999 in writing and supported by
fully committed financing and that has been neither solicited, initiated or
encouraged by the Vendor or by the board of directors or any director of the
Vendor, or from amending any recommendation given to the Vendor's shareholders
in connection with the sale of the Purchased Shares to the Purchaser if to fail
to so act would, in the opinion of the board of directors of the Vendor upon the
advice of legal counsel, be inconsistent with the proper exercise of its or his
fiduciary duties under applicable
<PAGE> 40
law. For greater certainty, any Alternative Transaction proposed after the date
hereof by a person with which the Vendor or any director of the Vendor had
discussions or negotiations prior to March 31, 1999 shall not be considered to
have been solicited, initiated or encouraged by such parties provided that such
discussions and negotiations were terminated at or prior to March 31, 1999.
In the event that prior to the Closing Date, an Alternative Transaction is
proposed or communicated to the Vendor or any of Vendor's Insiders (as that term
is defined in the Ontario Securities Act) or is publicly announced and an
Alternative Transaction is subsequently completed within 12 months thereafter,
the Vendor agrees to pay in immediately available funds within five business
days of such completion to the Purchaser a fee equal to 5% of the aggregate
value of the consideration paid or payable pursuant to the Alternative
Transaction. In addition, in the event that Vendor's shareholders approval of
the transactions contemplated by this Agreement is not obtained for any reason,
the Vendor agrees to pay to Purchaser in immediately available funds within five
business days of such shareholder meeting an amount equal to all of the
Purchaser's out of pocket expenses in connection with the entering into and
fulfilling of its rights and obligations under the March 31, 1999 letter
agreement between the parties and this Agreement to a maximum of $450,000. Any
amount so paid in reimbursement of expenses shall be deducted from any amount
paid to the Purchaser in respect of the completion of an Alternative
Transaction.
In the event the transactions contemplated by this Agreement are not completed
as a result of the exercise by the Purchaser of its rights under Section 6.1(i),
the Purchaser agrees to pay in immediately available funds within five business
days of such exercise to the Vendor an amount equal to the Vendor's out of
pocket expenses in connection with the entering into and fulfilling its
obligations under this Agreement to a maximum of $100,000.
<PAGE> 41
5.5 Registration and Listing of the Hecla Shares. Subject to the conditions
specified below, the Purchaser shall prepare and file with the United States
Securities Exchange Commission (the "SEC") no later than twenty (20) Business
Days from the date hereof and thereafter use all reasonable efforts to cause to
become effective as promptly as practicable a registration statement (the
"Registration Statement") for a public offering to be made on a continuous or
delayed basis pursuant to Rule 415 under the United States Securities Act (or
any successor to such rule permitting securities to be registered on a
continuous or delayed basis in the future) covering the Hecla Shares in order to
permit the public sale or disposition of the Hecla Shares by Vendor:
(a) The Purchaser will prepare and file with the SEC amendments and
supplements to such Registration Statement and the prospectus (the
"Prospectus") used in connection therewith as may be necessary to keep
such Registration Statement effective under the United States
Securities Act for a period of two (2) years following the effective
date of the Registration Statement (subject to earlier termination in
the event all the Hecla Shares held by Vendor have been sold prior to
the end of such two (2) year period.)
(b) The Purchaser will furnish to the Vendor such number of copies of the
Registration Statement and such Prospectus and amendment or supplement
as the Vendor shall reasonably request.
(c) The Purchaser will notify the Vendor in the event any Prospectus then
in use contains any untrue statement of a material fact or any
omission of a material fact necessary to make the statements therein
in light of the circumstances under which they are made not
misleading.
<PAGE> 42
(d) The Purchaser will use all reasonable efforts to register or qualify
the Hecla Shares covered by such Registration Statement for
disposition by the Vendor under such other securities or "blue sky"
laws of such jurisdictions as the Vendor shall reasonably request;
provided, however, that the Purchaser shall not for any such purpose
be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it would not but for the
requirements of this clause (d) be obligated to be so qualified, to
subject itself to taxation in any such jurisdiction or to consent to
general service of process in any such jurisdiction.
(e) If the Purchaser shall furnish to the Vendor a certificate signed by
the Chairman and Chief Executive Officer, the President or any Vice
President of the Purchaser stating that the Purchaser would be
required to disclose in the Registration Statement relating to the
Hecla Shares or in any amendment or supplement to such Registration
Statement and the Prospectus used in connection therewith, a material
business situation, transaction or negotiation affecting the Purchaser
which, in the reasonable opinion of the Purchaser's counsel, the
Purchaser would not otherwise be required by law to publicly disclose
and such disclosure would, in the reasonable opinion of the Purchaser,
materially and adversely affect such business situation, transaction
or negotiation, the obligation of the Purchaser to file such
Registration Statement or the Prospectus used in connection therewith
(or to keep such Registration Statement or Prospectus effective) shall
be tolled until the earlier to occur of (i) the date of public
disclosure of such material business situation, transaction or
negotiation or (ii) the date on which the
<PAGE> 43
Purchaser would no longer be required to make such disclosure;
provided, however, that the obligation of the Purchaser to file such
Registration Statement or the Prospectus used in connection therewith
may not be tolled for more than ninety (90) days.
(f) The Purchaser shall use all reasonable efforts to list the Hecla
Shares on the New York Stock Exchange.
(g) The Purchaser shall pay all expenses incurred in connection with the
preparation and filing of the Registration Statement and otherwise
incurred in connection with the registration of Hecla Shares; provided
that the Vendor shall pay all underwriting discounts and commissions
and transfer taxes, if any, relating to the sale or disposition of
the Hecla Shares by Vendor pursuant to a Registration Statement
effected pursuant to this Agreement.
Notwithstanding the foregoing, the Purchaser shall not be obligated to
enter into any type of underwriting agreement.
The Vendor agrees that upon receipt of any notice from the Purchaser of the
happening of any event of the kind described in clause (c) of this Section 5.5
the Vendor will forthwith discontinue disposition of the Hecla Shares pursuant
to the Registration Statement covering such Hecla Shares until the Vendor
receives copies of a Prospectus Supplement or amendment so that the Prospectus
does not contain any untrue statement of a material fact or any omission of a
material fact necessary to make the statements therein in light of the
circumstances under which they are made not misleading. In addition, the Vendor
agrees that upon receipt of a certificate
<PAGE> 44
from Purchaser of the kind described in clause (e) of this Section 5.5, the
Vendor will forthwith discontinue disposition of the Hecla Shares pursuant to
the Registration Statement covering the Hecla Shares until the earlier of (i)
the date of public disclosure of such material business situation, transaction
or negotiation or (ii) the date on which the Purchaser would no longer be
required to make such disclosure.
The Purchaser may require the Vendor to furnish to the Purchaser and its
counsel such information regarding the Vendor and the distribution of the Hecla
Shares as the Purchaser may from time to time request in writing for the
purposes of giving effect to this Section 5.5. Such information may be included
in the Registration Statement and other SEC filings as required by applicable
law.
5.6 Trading Limitation of Purchased Shares. Following the registration and
listing of the Hecla Shares pursuant to Section 5.5 hereof, the Vendor shall
not, in the aggregate, dispose of more than 25,000 of the Hecla Shares during
any one trading day. In addition, so long as the Vendor continues to hold at
least twenty percent (20%) of the Hecla Shares held by it upon consummation of
the transactions contemplated by this Agreement, the Vendor shall provide the
Purchaser with reasonable advance notice of any such sale of the Hecla Shares.
The Vendor shall not be obligated to complete any sale of Hecla Shares even if
it has provided the Purchaser with advance written notice of such sale, but
Vendor shall notify Purchaser of its withdrawal of any Hecla Shares from the
market with respect to which Vendor has provided prior notice of sale. Purchaser
shall notify Vendor of the pendency of a sale under any underwritten public
offering by Purchaser of Purchaser's common stock or any other Purchaser equity
security, in which event the Vendor shall not effect any sales of any Hecla's
Shares within five (5) days prior to the
<PAGE> 45
commencement of or during such underwritten public offering. The Vendor shall
have the right to sell any amount of Hecla Shares in a private transaction,
provided that (i) any such sale shall not be reported or reportable on any
exchange or other public market where shares of Purchaser are or may in future
be traded, and (ii) the purchaser in such private transaction agrees in writing
that, for a period of six (6) months from and after the date of such purchase
and sale of Hecla Shares, such purchaser shall not sell any such Hecla Shares.
In addition, the Vendor shall be permitted to pledge any number of Hecla Shares
to an arm's-length lender to secure payment of a bona fide loan or other
indebtedness.
ARTICLE 6
CONDITIONS OF CLOSING
6.1 Conditions to the Obligations of the Purchaser: Notwithstanding anything
herein contained, the obligation of the Purchaser to complete the transactions
contemplated herein will be subject to the fulfilment of the following
conditions at or prior to the Time of Closing, and, to the extent that they
involve the Vendor, the Vendor covenants to use its best efforts to ensure that
such conditions are fulfilled:
(a) Accuracy of Representations and Warranties and Performance of
Covenants. The representations and warranties of the Vendor contained
in this Agreement or in any documents delivered in order to carry out
the transactions contemplated herein will on the date hereof have been
and at the Time of Closing will be complete, true and accurate at the
Time of Closing with the same force and effect as though such
representations and warranties had been made as of the Time of
<PAGE> 46
Closing (regardless of the date as of which the information in this
Agreement or in any schedule or other document made pursuant hereto is
given). In addition, the Vendor will have complied with all of its
obligations herein agreed to be performed or discharged or caused to
be performed or discharged at or prior to the Time of Closing and will
have delivered to the Purchaser an officer's certificate confirming
the completeness, truth and accuracy of such representations and
warranties as at the Time of Closing and the compliance of the Vendor
with all such obligations.
(b) No Restraining Proceedings. No order, decision or ruling of any
Governmental Body will have been made, and no action or proceeding
will be pending or threatened which, in the reasonable opinion of the
Purchaser's Attorneys, is likely to result in an order, decision or
ruling to disallow, enjoin, prohibit or impose any limitations or
conditions on the purchase and sale of the Purchased Shares
contemplated hereby or the right of the Purchaser to own the Purchased
Shares.
(c) Consents and Approvals. All consents and corporate and regulatory
approvals required to be obtained by the Vendor and the Purchaser in
order to carry out the transactions contemplated herein in compliance
with all laws and agreements binding upon the parties hereto specified
in Schedules "G" and "H" will have been obtained.
(d) Subscription Agreement. The Vendor will have executed the Subscription
Agreement and have performed its obligations thereunder.
<PAGE> 47
(e) Royalty Agreement. The Vendor or its nominee will have executed the
Royalty Agreement.
(f) Intercompany Debt. The Vendor will have released, by assignment or
capitalization, all existing intercompany debt owed to the Vendor by
MRIL in a tax efficient manner reasonably acceptable to Purchaser and
Vendor, which debt on March 31, 1999 was $108,529,803.04.
(g) Material Adverse Impact. During the Interim Period there will have
been no material adverse change in the condition of the Property or
the Business, howsoever arising which would have an adverse impact on
MRIL in an amount of or exceeding one million dollars ($1,000,000).
(h) Attorney's Opinion. The Vendor's Attorneys will have delivered an
opinion, in form and substance satisfactory to the Purchaser, as to
the legal status of the Purchased Shares, MRIL and the Subsidiaries,
the validity and enforceability of this Agreement, the Subscription
Agreement and the Royalty Agreement and the transactions contemplated
hereby, and any other matter reasonably requested by the Purchaser,
acting on the advice of the Purchaser's Attorneys, which has arisen
since the date of this Agreement.
(i) Purchaser's Financing. Purchaser shall have obtained project financing
in an amount of at least $13,000,000 on such terms and conditions as
Purchaser deems acceptable, acting reasonably.
<PAGE> 48
(j) Tailings Dam at the Mine. Purchaser shall be satisfied, acting
reasonably that the tailings dam containing the tailings pond at the
Mine is a sound and stable structure, and that all improvements being
made to said tailings dam are being executed in a good and workmanlike
manner, in accordance with an engineered plan acceptable under Local
Law and to Purchaser acting reasonably.
(k) Schedule "A" - Chattels. Vendor and Purchaser shall cooperate to have
delivered to Purchaser Schedule "A" - Chattels, which shall contain a
list acceptable to Purchaser of all Chattels which are and shall be
owned by MRIL on the Closing Date. Vendor shall not sell any Chattels
which are individually worth more than five thousand dollars ($5,000)
or more than twenty five thousand dollars ($25,000) in the aggregate
without the written approval of the Advisory Committee established
pursuant to Section 5.1 of this Agreement.
(l) Corporate Entities to be Liquidated or Transferred. With the
exception of the interests held by MRIL in the Subsidiaries, MRIL will
have assigned to Vendor or its affiliates the obligations of,
liquidated or transferred all shares or interests held by it in any
corporate entity or partnership, specifically, (i) it will have
transferred to the Vendor or its nominee all shares held by it in
Monarch Resources U.S.A., Inc.; and (ii) MRIL will have liquidated or
transferred to the Vendor or its nominee all the shares held by it in
Orominera, C.A., Proyectos Tecnicos Mineros (PROTEMIN) C.A., a joint
venture company organized and existing under the laws of Venezuela,
formed among MRIL, CVG, Inversiones Balder, C.A. and Adeter, C.A., in
which MRIL owns a 49% equity interest, which was dissolved in
<PAGE> 49
1991, is in the process of being liquidated and which shares may not
be transferred, Recursos Monarch de Venezuela, C.A., and Minera Cima,
C.A. Monarch Minera Suramericana, C.A. will have liquidated or
transferred to the Vendor or its nominee all shares held by it in
Monarch Minera El Dorado, C.A., Monarch Minera Jaspe, C.A., Monarch
Minera de Exploracion, C.A., and Monarch Minera Cuyuni, C.A.
(m) Arab Bank Switzerland. The Arab Bank Switzerland will release the
security it holds against Monarch Resources de Mexico, S.A. de C.V., a
Mexican corporation ("Monarch Mexico"), and will return to the Vendor
the shares of Monarch Mexico which Arab Bank Switzerland has in its
possession.
6.2 Waiver or Termination by Purchaser: The conditions contained in Section
6.1 are inserted for the exclusive benefit of the Purchaser and may be waived in
whole or in part by the Purchaser at any time. The Vendor acknowledges that the
waiver by the Purchaser of any condition or any part of any condition will
constitute a waiver only of such condition or such part of such condition, as
the case may be, and will not constitute a waiver of any covenant, agreement,
representation or warranty made by the Vendor herein that corresponds or is
related to such condition or such part of such condition, as the case may be. If
any of the conditions contained in Section 6.1 are not fulfilled or complied
with as herein provided, the Purchaser may, at or prior to the Time of Closing,
at its option rescind this Agreement by notice in writing to the Vendor and in
such event the Purchaser will be released from all obligations hereunder and,
unless the condition or conditions which have not been fulfilled are reasonably
capable of being fulfilled or caused to be fulfilled by the Vendor, then the
Vendor will also be released from all obligations hereunder.
<PAGE> 50
6.3 Conditions to the Obligations of the Vendor: Notwithstanding anything
herein contained, the obligations of the Vendor to complete the transactions
contemplated herein will be subject to the fulfilment of the following
conditions at or prior to the Time of Closing, and, to the extent that they
involve the Purchaser, it will use its best efforts to ensure that such
conditions are fulfilled:
(a) Accuracy of Representations and Warranties and Performance of
Covenants. The representations and warranties of the Purchaser
contained in this Agreement, the Subscription Agreement or in any
other documents delivered in order to carry out the transactions
contemplated herein will on the date hereof have been and at the Time
of Closing will be complete, true and accurate, at the Time of Closing
with the same force and effect as though such representations and
warranties had been made as of the Time of Closing (regardless of the
date as of which the information in this Agreement or any such
schedule or other document made pursuant hereto is given). In
addition, the Purchaser will have complied with all of its obligations
herein agreed to be performed or discharged or caused to be performed
or discharged at or prior to the Time of Closing and will have
delivered to the Vendor an officer's certificate confirming the
completeness, truth and accuracy of such representations and
warranties as at the Time of Closing and the compliance by the
Purchaser with all of such obligations.
(b) No Restraining Proceedings. No order, decision or ruling of any
Governmental Body will have been made, and no action or proceeding
will be pending or threatened which, in the reasonable opinion of the
Vendor's Solicitors, is likely to result in an order, decision or
ruling, to disallow, enjoin or prohibit the purchase and sale of the
Purchased Shares contemplated hereby.
<PAGE> 51
(c) Consents and Approvals. All consents and corporate and regulatory
approvals required to be obtained by the Purchaser and the Vendor in
order to carry out the transactions contemplated herein in compliance
with all laws and agreements binding upon the parties hereto specified
in Schedules "G" and "H" will have been obtained.
(d) Subscription Agreement. The Purchaser will have executed the
Subscription Agreement and have performed its obligations thereunder.
(e) Royalty Agreement. The Purchaser will have executed the Royalty
Agreement.
(f) Attorney's Opinion. The Purchaser's Attorneys will have delivered an
opinion, in form and substance satisfactory to the Vendor, as to the
legal status of the Hecla Shares, the validity and enforceability of
this Agreement and the transactions contemplated hereby, the
Subscription Agreement and the Royalty Agreement and any other matter
reasonably requested by the Vendor, acting on the advice of the
Vendor's Attorneys, which has arisen since the date of this Agreement.
6.4 Waiver or Termination by Vendor: The conditions contained in Section 6.3
are inserted for the exclusive benefit of the Vendor and may be waived in whole
or in part by the Vendor at any time. The Purchaser acknowledges that the waiver
by the Vendor of any condition or any part of any condition will constitute a
waiver only of such condition or such part of such condition, as the case may
be, and will not constitute a waiver of any covenant, agreement, representation
or warranty made by the Purchaser herein that corresponds or is related to such
condition or such part of such condition, as the case may be. If any of the
conditions contained
<PAGE> 52
in Section 6.3 are not fulfilled or complied with as herein provided, the Vendor
may, at or prior to the Time of Closing, at its option rescind this Agreement by
notice in writing to the Purchaser and in such event the Vendor will be released
from all obligations hereunder and, unless the condition or conditions which
have not been fulfilled are reasonably capable of being fulfilled or caused to
be fulfilled by the Purchaser, then the Purchaser will also be released from all
obligations hereunder.
ARTICLE 7
CLOSING
7.1 Vendor's Deliveries: At the Time of Closing the Vendor will deliver to the
Purchaser all documents, instruments and things which are to be delivered by the
Vendor pursuant to this Agreement including:
(a) an officer's certificate pursuant to Subsection 6.l(a), the
Subscription Agreement pursuant to Subsection 6.l(d), the Royalty
Agreement pursuant to Subsection 6.1(e), the Vendor's Attorneys'
opinion pursuant to Subsection 6.1(f), and written confirmation that
the remaining conditions set forth in Section 6.3 have been fulfilled
to the Vendor's satisfaction or waived;
(b) a share certificate of MRIL representing the Purchased Shares
registered in the name of the Purchaser or its nominee;
(c) resignations and releases from all officers and directors of MRIL and
the Subsidiaries;
<PAGE> 53
(d) certified true copies of the resolutions of directors and
shareholders of MRIL and the Vendor as may be required by law to give
effect to this transaction;
(e) all consents including stock exchange approvals or other approvals to
the sale and purchase of the Purchased Shares as may be required to
complete the transactions contemplated hereunder;
(f) registrable releases of any Encumbrances against all or any part of
the Purchased Shares or the Property, other than Permitted
Encumbrances;
(g) satisfactory evidence from the Vendor that MRIL is released or
discharged from all intercompany debt owing by MRIL or the
Subsidiaries to Vendor;
(h) all corporate records and books of account of MRIL and the
Subsidiaries, including minute books, share register books, share
certificate books, annual reports, audited financial statements and
tax records;
(i) every common seal of MRIL and the Subsidiaries; and
(j) all access cards, security cards, passwords and keys (including master
keys) relating to any of the Property.
7.2 Purchaser's Deliveries: At the Time of Closing the Purchaser will deliver
to the Vendor all documents, instruments and things which are to be delivered by
the Purchaser pursuant to this Agreement including:
<PAGE> 54
(a) an officer's certificate pursuant to Subsection 6.3(a), the
Subscription Agreement pursuant to Subsection 6.3(d), the Royalty
Agreement pursuant to Subsection 6.3(e), evidence of the United States
Securities Exchange Commission filing, and if completed, evidence of
the registration and listing of the Hecla Shares on the NYSE pursuant
to Subsection 5.5, the Purchaser's Attorneys' opinion pursuant to
Subsection 6.3(f) and written confirmation that the remaining
conditions set forth in Section 6.1 have been fulfilled to the
Purchaser's satisfaction or are waived;
(b) the Purchase Price, as contemplated in Article 2; and
(c) certified true copies of the resolutions of directors of the Purchaser
as may be required by law to give effect to this transaction.
7.3 Place of Closing: The closing will take place a location mutually
agreeable to the parties, acting reasonably.
7.4 Closing Procedure: The closing of the purchase and sale of the Purchased
Shares will be completed in accordance with the usual practices. The closing
will be effected by:
(a) the delivery to the Purchaser of the Vendor's deliveries, as set out
in Section 7.1; and
(b) the delivery to the Vendor of the Purchaser's deliveries, as set out
in Section 7.2.
<PAGE> 55
7.5 Return of Data: The Purchaser will forthwith return all documentation
obtained by the Purchaser from the Vendor or MRIL with respect to the Property
and the Business and all copies thereof, if this Agreement is terminated or the
sale of the Purchased Shares by the Vendor to the Purchaser pursuant to this
Agreement is not completed.
ARTICLE 8
GENERAL
8.1 Cross-Indemnity: Each party agrees to indemnify and save the other
harmless from and against any and all losses, claims, damages (including
interest, penalties, fines and monetary sanctions), liabilities and costs
(including actual lawyers' and accountants' fees and expenses incurred by the
other party and court costs) incurred or suffered by the other party as a result
of, in respect of or arising out of:
(a) any non-performance or non-fulfillment of any covenant or agreement of
such party contained in this Agreement or in any document given in
order to carry out the transactions contemplated herein; and
(b) any misrepresentation or inaccuracy of any representation or warranty
made by such party contained in this Agreement or contained in any
document or certificate given in order to carry out the transactions
contemplated herein.
8.2 Vendor's Indemnity: Vendor agrees to indemnify and save Purchaser harmless
from and against any and all losses, claims, damages (including interest,
penalties, fines and monetary sanctions), liabilities and costs (including
actual lawyers' and accountants' fees and expenses incurred by the other party
and court costs) incurred or suffered by Purchaser as a result of, in respect of
or arising out of:
<PAGE> 56
(a) obligations under Local Laws relating to any employee's or independent
contractor's (who is deemed to be an employee) termination prior to
the Closing Date;
(b) obligations in respect of an employee's or an independent contractor's
(who is deemed to be an employee under Local Law) employment,
compensation benefits or other employee obligations for which a claim
has been made by such employee or independent contractor prior to the
Closing Date;
(c) any tax obligations (including interest and penalties) relating to
periods prior to the Closing Date pursuant to Local Law which are not
recorded in the Final Balance Sheet;
(d) any obligation to pay any amount to a third party which is due prior
to the Closing Date and is not recorded in the Final Balance Sheet which
obligations, for greater certainty, do not include any costs related to
closure of the Mine.
8.3 Indemnity Limitations: The obligations of indemnification pursuant to
Section 8.1 will be subject to the limitations referred to in Sections 3.2 and
4.2, as applicable, with respect to the survival of the representations and
warranties, to the provisions of Sections 3.3 and 4.3, with respect to
limitations on warranty claims and to the provisions of Section 8.4.
8.4 Provisions Relating to Indemnity Claims: The following provisions will
apply to any Indemnity Claim:
<PAGE> 57
(a) after becoming aware of any matter that may give rise to an Indemnity
Claim, the Indemnified Party will provide to the Indemnifying Party
written notice of the Indemnity Claim specifying (to the extent that
information is available) the factual basis for the Indemnity Claim and
the amount of the Indemnity Claim or, if an amount is not then
determinable, an estimate of the amount of the Indemnity Claim, if an
estimate is feasible in the circumstances;
(b) with respect to any Third Party Liability, provided the Indemnifying
Party first admits in writing the Indemnified Party's right to
indemnification for the amount of such Third Party Liability which may
at any time be determined or settled, then in any legal,
administrative or other proceedings in connection with the matters
forming the basis of the Third Party Liability, the following
procedures will apply:
(i) the Indemnifying Party will have the right to assume carriage of
the compromise or settlement of the Third Party Liability and the
conduct of any related legal, administrative or other
proceedings, but the Indemnified Party will have the right and
will be given the opportunity to fully participate in the defense
of the Third Party Liability, to reasonably agree with the
Indemnifying Party in the settlement of the Third Party Liability
and the general conduct of related legal, administrative and
other proceedings (including consultation with counsel) and to
disagree on reasonable grounds with the selection and retention
of counsel, in which case counsel satisfactory to the
Indemnifying Party and the Indemnified Party will be retained by
the Indemnifying Party;
<PAGE> 58
(ii) the Indemnifying Party and the Indemnified Party will co-operate
with one another in relation to the Third Party Liability, the
Indemnifying Party will keep the Indemnified Party fully advised
with respect thereto, will provide the Indemnified Party with
copies of all relevant documentation as it becomes available,
will provide the Indemnified Party with access to all records and
files relating to the defense of the Third Party Liability and
will meet with representatives of the Indemnified Party at all
reasonable times to discuss the Third Party Liability, and
(c) if, with respect to any Third Party Liability, the Indemnifying Party
does not admit the Indemnified Party's right to indemnification in
writing or declines to assume carriage of the settlement or of any
legal, administrative or other proceedings relating to the Third Party
Liability, then the following provisions will apply:
(i) the Indemnified Party, at its discretion, may assume carriage of
the settlement or of any legal, administrative or other
proceedings relating to the Third Party Liability and may defend
or settle the Third Party Liability on such terms as the
Indemnified Party, acting in good faith, considers advisable; and
(ii) any cost, loss, damage or expense incurred or suffered by the
Indemnified Party in the settlement of such Third Party Liability
or the conduct of any legal, administrative or other proceedings
will be added to the amount of the Indemnity Claim.
<PAGE> 59
8.5 Further Assurances: Each of the parties hereto will execute and deliver
all such further documents and instruments and do all such acts and things as
any party may, either before or after the Closing Date, reasonably require in
order to carry out the full intent and meaning of this Agreement.
8.6 Notice: Any notice, direction, or other instrument required or permitted
to be given to a party hereunder will be in writing and will be given by
personal delivery of same or by facsimile in each case addressed to the intended
recipient as follows:
(a) if to the Purchaser at:
6500 Mineral Drive
Coeur d'Alene, Idaho
83815-8788
U.S.A.
Attn: Roger A. Kauffman, Executive Vice President and
Chief Operating Officer
Facsimile: (208) 769-4107
with a copy to:
6500 Mineral Drive
Coeur d'Alene, Idaho
83815-8788
U.S.A.
Attn: Michael B. White, Vice President - General Counsel
Facsimile: (208) 769-7612
<PAGE> 60
(b) if to the Vendor at:
Monarch Resources Limited
41 Cedar Avenue
Hamilton, Bermuda HM12
Attn: Carol Summers, Secretary
Facsimile: (441) 295-5328
and
Monarch Resources Limited
5 Dickens Drive
Princeton Junction, New Jersey
08550
Attn: Lester C. Knight, Vice-President Finance & CFO
Facsimile: (609) 716-4923
with a copy to:
Fasken Campbell Godfrey
4200 Toronto Dominion Bank Tower
Box 20, TD Centre
Toronto, Ontario
M5K 1N6
Attn: Joel Binder
Facsimile: (416) 364-7813
or such other address or addresses as the parties hereto may from time to time
hereafter designate by written notice given hereunder. Any notice, direction or
other instrument aforesaid will, if delivered, be deemed to have been given and
received on the day it was delivered, and if sent by facsimile, be deemed to
have been given and received on the first Business Day following the day of
transmission.
8.7 Amendment or Variation: This Agreement may not be amended or varied except
by an instrument in writing signed by the party against whom enforcement of such
amendment or variation is sought.
<PAGE> 61
8.8 Expenses: Except as otherwise specifically provided, all fees,
disbursements and other costs and expenses associated with the transactions
contemplated in this Agreement including those of legal counsel, auditors and
financial advisers, will be borne by the party incurring such expense.
8.9 Counterparts: This Agreement may be executed by the parties in one or more
counterparts and signatures exchanged by telecopier with the same effect as if
all the parties had executed one original document.
8.10 Assignment: Neither Party may assign this Agreement, in whole or in part,
without the prior written consent of the other party.
8.11 Entire Agreement: This Agreement contains the entire agreement between the
parties with respect to the transactions contemplated herein, and is delivered
in connection with and supersedes that certain Letter Agreement dated March 31,
1999, as extended by further Letter Agreement dated May 10, 1999. No oral
agreement, promise, statement or representation which is not contained herein
shall be binding on the parties unless subsequently reduced to writing and
signed by the parties. The provisions of this Agreement shall supersede all
previous oral or written agreements between the parties hereto with respect to
the transactions contemplated herein.
<PAGE> 62
IN WITNESS WHEREOF the parties have executed this Agreement as of the date
first above written.
MONARCH RESOURCES LIMITED HECLA MINING COMPANY
Per: /s/ Lester C. Knight Per: /s/ Roger A. Kauffman
-------------------------- ---------------------------------
LESTER C. KNIGHT ROGER A. KAUFFMAN
Vice President Finance - CFO Executive Vice President - Chief
Operating Officer
Per: Per: /s/ Michael B. White
---------------------------------
MICHAEL B. WHITE
Vice President - General Counsel
and Secretary
