Exhibit 10.1

EXECUTION VERSION

SECOND AMENDED AND RESTATED

CREDIT AGREEMENT,

dated as of October 14, 2009,

among

HECLA MINING COMPANY,

as the Parent

HECLA ALASKA LLC,

HECLA GREENS CREEK MINING COMPANY, and

HECLA JUNEAU MINING COMPANY,

as the Borrowers,

VARIOUS FINANCIAL INSTITUTIONS AND OTHER PERSONS

FROM TIME TO TIME PARTIES HERETO,

as the Lenders, and

THE BANK OF NOVA SCOTIA,

as the Administrative Agent for the Lenders.

 

 

SCOTIA CAPITAL,

and

ING CAPITAL LLC,

as Co-Lead Arrangers and Co-Bookrunners

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TABLE OF CONTENTS

 

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ARTICLE I      DEFINITIONS AND ACCOUNTING TERMS

  

SECTION 1.1.           Defined Terms

   2

SECTION 1.2.           Use of Defined Terms

   30

SECTION 1.3.           Certain Interpretive Matters

   30

SECTION 1.4.           Cross-References

   31

SECTION 1.5.           Accounting and Financial Determinations

   31 ARTICLE II      COMMITMENTS AND BORROWING AND NOTES

SECTION 2.1.           Continuation of Loans

   32

SECTION 2.2.           Reduction of the Commitment Amounts

   33

SECTION 2.3.           Borrowing Procedure

   33

SECTION 2.4.           Use of Proceeds

   33

SECTION 2.5.           Continuation and Conversion Elections

   33

SECTION 2.6.           Funding

   34

SECTION 2.7.           Register; Notes

   34 ARTICLE III      REPAYMENTS, PREPAYMENTS, INTEREST AND FEES

SECTION 3.1.           Repayments and Prepayments; Application

   35

SECTION 3.1.1.

   Repayments and Prepayments    35

SECTION 3.1.2.

   Application    36

SECTION 3.2.           Interest Provisions

   36

SECTION 3.2.1.

   Rates    36

SECTION 3.2.2.

   Default Rates    36

SECTION 3.2.3.

   Payment Dates    37

SECTION 3.3.           Fees

   37

SECTION 3.3.1.

   Fee Letters Amounts    37

SECTION 3.3.2.

   Commitment Fee    37 ARTICLE IV      CERTAIN LIBO RATE AND OTHER PROVISIONS

SECTION 4.1.           LIBO Rate Lending Unlawful

   37

SECTION 4.2.           Deposits Unavailable

   38

SECTION 4.3.           Increased LIBO Rate Loan Costs, etc

   38

SECTION 4.4.           Funding Losses

   38

 

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SECTION 4.5.           Increased Capital Costs

   39

SECTION 4.6.           Taxes

   39

SECTION 4.7.           Payments, Computations, Proceeds of Collateral, etc

   41

SECTION 4.8.           Sharing of Payments

   42

SECTION 4.9.           Setoff

   42 ARTICLE V      CONDITIONS TO EFFECTIVENESS AND CREDIT EXTENSIONS   

SECTION 5.1.          Effectiveness

   43

SECTION 5.1.1.

   Credit Agreement    43

SECTION 5.1.2.

   Resolutions, etc    43

SECTION 5.1.3.

   Effective Date Certificate    43

SECTION 5.1.4.

   Delivery of Notes    44

SECTION 5.1.5.

   Solvency, etc    44

SECTION 5.1.6.

   Guarantees    44

SECTION 5.1.7.

   Pledge Agreement and Security Agreement    44

SECTION 5.1.8.

   Filing Agent, etc    45

SECTION 5.1.9.

   Insurance    45

SECTION 5.1.10.

   Opinion of Counsel    45

SECTION 5.1.11.

   Closing Fees, Expenses, etc    45

SECTION 5.1.12.

   PATRIOT Act Disclosures    45

SECTION 5.1.13.

   Compliance Certificate    45

SECTION 5.1.14.

   Hecla Mine Plan    46

SECTION 5.1.15.

   Material Adverse Change    46

SECTION 5.2.          All Credit Extensions

   46

SECTION 5.2.1.

   Compliance with Warranties, No Default, etc    46

SECTION 5.2.2.

   Credit Extension Request, etc    46

SECTION 5.2.3.

   Satisfactory Legal Form    46 ARTICLE VI      REPRESENTATIONS AND WARRANTIES
  

SECTION 6.1.           Organization, etc

   47

SECTION 6.2.           Due Authorization, Non-Contravention, etc

   47

SECTION 6.3.           Government Approval, Regulation, etc

   47

 

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SECTION 6.4.           Validity, etc

   47

SECTION 6.5.           Financial Information; Undisclosed Liabilities

   48

SECTION 6.6.           No Material Adverse Change

   48

SECTION 6.7.           Litigation, Labor Controversies, etc

   48

SECTION 6.8.           Subsidiaries

   48

SECTION 6.9.           Ownership of Properties

   48

SECTION 6.10.         Taxes

   49

SECTION 6.11.         Pension and Welfare Plans

   49

SECTION 6.12.         Environmental Warranties

   50

SECTION 6.13.         Accuracy of Information

   51

SECTION 6.14.         Regulations U and X

   51

SECTION 6.15.         Material Contracts

   51

SECTION 6.16.         Solvency

   51

SECTION 6.17.         Insurance

   51

SECTION 6.18.         Condition of Business and Operations

   51

SECTION 6.19.         Compliance with Law, etc

   52

SECTION 6.20.         Mining Rights

   52

SECTION 6.21.         Greens Creek Operations

   52

SECTION 6.22.         Indebtedness of the Greens Creek Group

   52 ARTICLE VII      COVENANTS

SECTION 7.1.           Affirmative Covenants

   52

SECTION 7.1.1.

  Financial Information, Reports, Notices, etc    52

SECTION 7.1.2.

  Maintenance of Existence; Compliance with Contracts, Laws, etc    55

SECTION 7.1.3.

  Maintenance of Properties    55

SECTION 7.1.4.

  Insurance    56

SECTION 7.1.5.

  Books and Records    56

SECTION 7.1.6.

  Visitation    56

SECTION 7.1.7.

  Environmental Law Covenant    57

SECTION 7.1.8.

  Future Guarantors, Security, etc    57

 

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SECTION 7.1.9.

   Further Assurances    59

SECTION 7.1.10.

   Material Subsidiaries    59

SECTION 7.1.11.

   Independent Corporate Existence    59

SECTION 7.1.12.

   Reserved    60

SECTION 7.1.13.

   Maintenance of Mining Rights    60

SECTION 7.1.14.

   Issuance of Subordinated Debt; Status of Obligations as Senior Indebtedness,
etc    60

SECTION 7.1.15.

   Sale Price of Gold, Silver, Lead and Zinc    60

SECTION 7.1.16.

   Post Closing    61

SECTION 7.2.           Negative Covenants

   61

SECTION 7.2.1.

   Business Activities    61

SECTION 7.2.2.

   Indebtedness    61

SECTION 7.2.3.

   Liens    63

SECTION 7.2.4.

   Financial Condition and Operations    64

SECTION 7.2.5.

   Investments    65

SECTION 7.2.6.

   Restricted Payments, etc    66

SECTION 7.2.7.

   No Prepayment of Certain Indebtedness    67

SECTION 7.2.8.

   Issuance of Capital Securities    68

SECTION 7.2.9.

   Consolidation, Merger, etc    68

SECTION 7.2.10.

   Permitted Dispositions    69

SECTION 7.2.11.

   Modification of Certain Agreements    69

SECTION 7.2.12.

   Transactions with Affiliates    70

SECTION 7.2.13.

   Restrictive Agreements, etc    70

SECTION 7.2.14.

   Hedging Agreements    71

SECTION 7.2.15.

   Restrictions on the Greens Creek Group    71

SECTION 7.2.16.

   Change to Fiscal Year    72

SECTION 7.2.17.

   Sale and Leaseback    72 ARTICLE VIII      EVENTS OF DEFAULT

SECTION 8.1.           Listing of Events of Default

   73

SECTION 8.1.1.

   Non-Payment of Obligations    73

 

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SECTION 8.1.2.

   Breach of Warranty    73

SECTION 8.1.3.

   Non-Performance of Certain Covenants and Obligations    73

SECTION 8.1.4.

   Non-Performance of Other Covenants and Obligations    73

SECTION 8.1.5.

   Default on Other Indebtedness    74

SECTION 8.1.6.

   Judgments    74

SECTION 8.1.7.

   Pension Plans    74

SECTION 8.1.8.

   Change in Control    74

SECTION 8.1.9.

   Bankruptcy, Insolvency, etc    75

SECTION 8.1.10.

   Impairment of Security, etc    75

SECTION 8.1.11.

   Failure of Subordination    75

SECTION 8.1.12.

   Abandonment of Greens Creek Mine or Lucky Friday Mine    76

SECTION 8.1.13.

   Regulatory Action    76

SECTION 8.1.14.

   Material Adverse Change    76

SECTION 8.1.15.

   Greens Creek    76

SECTION 8.2.          Action if Bankruptcy

   76

SECTION 8.3.          Action if Other Event of Default

   76

ARTICLE IX      THE ADMINISTRATIVE AGENT

SECTION 9.1.          Appointments; Actions

   77

SECTION 9.2.          Funding Reliance, etc

   77

SECTION 9.3.          Exculpation

   78

SECTION 9.4.          Successor

   78

SECTION 9.5.          Loans by Scotiabank

   78

SECTION 9.6.          Credit Decisions

   79

SECTION 9.7.          Copies, etc

   79

SECTION 9.8.          Reliance by Administrative Agent

   79

SECTION 9.9.          Defaults

   80

SECTION 9.10.        Appointment of Supplemental Agents, Sub-Agents; etc

   80

ARTICLE X      MISCELLANEOUS PROVISIONS

 

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SECTION 10.1.            Waivers, Amendments, etc

   81

SECTION 10.2.            Notices; Time

   82

SECTION 10.3.            Payment of Costs and Expenses

   82

SECTION 10.4.            Indemnification

   83

SECTION 10.5.            Survival

   84

SECTION 10.6.            Severability

   84

SECTION 10.7.            Headings

   84

SECTION 10.8.            Execution in Counterparts, Effectiveness, etc

   84

SECTION 10.9.            Governing Law; Entire Agreement

   85

SECTION 10.10.          Successors and Assigns

   85

SECTION 10.11.          Sale and Transfer of Credit Extensions; Participations
in Credit Extensions; Notes

   85

SECTION 10.12.          Replacement of Lenders under Certain Circumstances

   88

SECTION 10.13.          Concerning Joint and Several Liability of the Borrowers

   89

SECTION 10.14.          Other Transactions

   91

SECTION 10.15.          Forum Selection and Consent to Jurisdiction

   91

SECTION 10.16.          Waiver of Jury Trial

   91

SECTION 10.17.          Independence of Covenants and Default Provisions

   92

SECTION 10.18.          Counsel Representation

   92

SECTION 10.19.          PATRIOT Act Notification

   92

SECTION 10.20.          Effect of Amendment and Restatement of the Existing
Credit Agreement

   92

SECTION 10.21.          Confidential Information

   93

 

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SCHEDULES AND EXHIBITS

 

SCHEDULE I   -      Disclosure Schedule SCHEDULE II   -      Percentages; LIBOR
Office; Domestic Office; Contact Information EXHIBIT A   -      Form of Note
EXHIBIT B   -      Form of Borrowing Request EXHIBIT C   -      Form of
Continuation/Conversion Notice EXHIBIT D   -      Form of Effective Date
Certificate EXHIBIT E   -      Form of Compliance Certificate EXHIBIT F   -     
Form of Subsidiary Guaranty EXHIBIT G   -      Form of Pledge Agreement EXHIBIT
H   -      Form of Security Agreement EXHIBIT I   -      Form of Interco
Subordination Agreement EXHIBIT J   -      Form of Lender Assignment Agreement
EXHIBIT K   -      Form of Parent Guaranty

 

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SECOND AMENDED AND RESTATED

CREDIT AGREEMENT

THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of October 14, 2009,
is among HECLA MINING COMPANY, a Delaware corporation (the “Parent”), HECLA
ALASKA LLC, a Delaware limited liability company (“Hecla Alaska”), HECLA GREENS
CREEK MINING COMPANY (formerly known as Kennecott Greens Creek Mining Company),
a Delaware corporation (“Hecla Greens Creek”), HECLA JUNEAU MINING COMPANY
(formerly known as Kennecott Juneau Mining Company), a Delaware corporation
(“Hecla Juneau”, and together with Hecla Alaska and Hecla Greens Creek, the
“Borrowers”, and each individually a “Borrower”), the various financial
institutions and other Persons from time to time parties hereto (the “Lenders”),
THE BANK OF NOVA SCOTIA (“Scotiabank”), as administrative agent (in such
capacity, the “Administrative Agent”) for the Lenders.

W I T N E S S E T H:

WHEREAS, the Parent and the Borrowers are engaged in the mining, extraction,
production, handling, milling and other forms of processing ores, minerals and
mineral resources (capitalized terms used in these recitals and not defined in
these recitals to have the meanings set forth in Section 1.1 below);

WHEREAS, the Parent has entered into that certain Amended and Restated Credit
Agreement, dated as of April 16, 2008 (as amended, supplemented or otherwise
modified from time to time prior to the date hereof, the “Existing Credit
Agreement”), with Scotiabank as administrative agent thereunder, and each lender
from time to time party thereto;

WHEREAS, each of the Borrowers has provided that certain Subsidiary Guaranty,
dated as of April 16, 2008 (as amended, supplemented or otherwise modified from
time to time prior to the date hereof, the “Existing Subsidiary Guaranty”), to
Scotiabank as administrative agent thereunder under which each Borrower has
guaranteed the obligations of Parent under the Existing Credit Agreement;

WHEREAS, the Parent and the Borrowers have requested that the Existing Credit
Agreement be amended and restated in its entirety to reflect the terms of this
Agreement, and the Lenders have agreed to amend and restate the Existing Credit
Agreement in its entirety to read as set forth in this Agreement with the intent
that the terms of this Agreement shall supersede the terms of the Existing
Credit Agreement (each of which shall hereafter have no further effect upon the
parties thereto, other than those that remain herein and other than for accrued
fees and expenses, and indemnification provisions, accrued and owing under the
terms of the Existing Credit Agreement on or prior to the date hereof or arising
(in the case of an indemnification) under the terms of the Existing Credit
Agreement, in each case to the extent provided for in the Existing Credit
Agreement);

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WHEREAS, the Parent and each of the Borrowers also request that the Obligations
of the Obligors under the Loan Documents (in each case, as defined in the
Existing Credit Agreement) continue under this Agreement and the Loan Documents;

WHEREAS, the Parent and each of the Borrowers further request that the Term
Loans under and as defined in the Existing Credit Agreement be continued under
this Agreement, with such modifications as set forth herein, including providing
the Borrowers the ability to reborrow principal amounts repaid with respect to
such Term Loans following the Effective Date; and

WHEREAS, the Lenders are willing, on the terms and subject to the conditions
hereinafter set forth, to agree to the foregoing.

NOW, THEREFORE, the parties hereto agree as follows.

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.1. Defined Terms. The following terms (whether or not underscored)
when used in this Agreement, including its preamble and recitals, shall, except
where the context otherwise requires, have the following meanings:

“6.5% Mandatory Convertible Preferred Stock” means the Parent’s 6.5% Mandatory
Convertible Preferred Stock, par value $0.25 per share.

“Administrative Agent” is defined in the preamble and includes each other Person
appointed as the successor Administrative Agent pursuant to Section 9.4.

“Affiliate” means, relative to any Person, any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person. “Control” of a Person means the power, directly or indirectly,

(x) to vote 10% or more of the Capital Securities (on a fully diluted basis) of
such Person having ordinary voting power for the election of directors, managing
members or general partners (as applicable); or

(y) to direct or cause the direction of the management and policies of such
Person (whether by contract or otherwise).

“Agreement” means, on any date, this Credit Agreement.

“Alternate Base Rate” means, on any date and with respect to all Base Rate
Loans, a fluctuating rate of interest per annum (rounded upward, if necessary,
to the next highest 1/16 of 1%) equal to the higher of (a) the Base Rate in
effect on such day, (b) the Federal Funds Rate in effect on such day plus  1/2
of 1% and (c) except during a LIBO Rate Unavailability Period, the sum of 1.00%
plus the one month LIBO Rate.

Changes in the rate of interest on that portion of any Loans maintained as Base
Rate Loans will take effect simultaneously with each change in the Alternate
Base Rate. The

 

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Administrative Agent will give notice promptly to the Borrower and the Lenders
of changes in the Alternate Base Rate; provided that the failure to give such
notice shall not affect the Alternate Base Rate in effect after such change.

“Applicable Law” means, relative to any Person, (x) all provisions of laws,
statutes, treaties, ordinances, rules, regulations, requirements, restrictions,
permits, certificates, decisions, directives, guidelines or orders of any
Governmental Authority applicable to such Person or any of its assets or
property and (y) all judgments, injunctions, orders and decrees of all courts
and arbitrators in proceedings or actions in which such Person is a party or by
which any of its assets or properties are bound.

“Applicable Margin” means (x) 5.00% per annum with respect to Base Rate Loans,
and (y) 6.00% per annum with respect to LIBO Rate Loans.

“Approval” means each approval, authorization, license, permit, franchise,
consent, certificate, franchise, exemption, filing or registration by or with
any Governmental Authority.

“Approved Fund” means any Person (other than a natural Person) that (a) is
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business,
and (b) is administered or managed by a Lender, an Affiliate of a Lender or a
Person or an Affiliate of a Person that administers or manages a Lender.

“Arrangers” means each of Scotia Capital and ING Capital LLC, and any Affiliates
of the foregoing, in each case in their respective capacities as co-lead
arrangers.

“Authorized Officer” means, relative to any Obligor, those of its officers,
general partners or managing members (as applicable) whose signatures and
incumbency shall have been certified to the Administrative Agent and the Lenders
pursuant to Section 5.1.2 (or otherwise most recently certified to the
Administrative Agent pursuant hereto).

“Bankruptcy Code” shall mean Title 11 of the United States Bankruptcy Code, as
amended from time to time, and any successor statute thereto.

“Base Rate” means, at any time, the rate of interest then most recently
established by the Administrative Agent in New York as its base rate for Dollars
loaned in the United States. The Base Rate is not necessarily intended to be the
lowest rate of interest determined by the Administrative Agent in connection
with extensions of credit.

“Base Rate Loan” means a Loan bearing interest at a fluctuating rate determined
by reference to the Alternate Base Rate.

“Board of Directors” means, relative to any Person, (w) in the case of any
corporation, its board of directors, (x) in the case of any limited liability
company, its board of managers (or the functional equivalent of the foregoing),
(y) in the case of any partnership, the Board of Directors of the general
partner of such partnership (or the functional equivalent of the foregoing) and
(z) in any other case, the functional equivalent of the foregoing.

 

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“Borrower” and “Borrowers” are defined in the preamble.

“Borrowing” means the Loans of the same type and, in the case of LIBO Rate
Loans, having the same Interest Period made by all Lenders required to make such
Loans on the same Business Day and pursuant to the same Borrowing Request in
accordance with Section 2.3.

“Borrowing Request” means a Loan request and certificate duly executed by an
Authorized Officer of a Borrower substantially in the form of Exhibit B hereto.

“Business Day” means

(x) any day which is neither a Saturday or Sunday nor a legal holiday on which
banks are authorized or required to be closed in New York, New York, London,
England or Toronto, Canada; and

(y) relative to the making, continuing, prepaying or repaying of any LIBO Rate
Loans, any day which is a Business Day described in clause (x) above and which
is also a day on which dealings in Dollars are carried on in the London
interbank eurodollar market.

“Capital Expenditure” means, for any period, the aggregate amount of (x) any
expenditure of the Parent or its Subsidiaries for fixed or capital assets made
during such period which, in accordance with GAAP, would be classified as a
capital expenditure and (y) any Capitalized Lease Liability incurred by the
Parent and its Subsidiaries during such period.

“Capital Security” means, with respect to any Person, any share, interest,
participation or other equivalent (however designated, whether voting or
non-voting) of such Person’s capital, whether now outstanding or issued after
the Effective Date.

“Capitalized Lease Liability” means, with respect to any Person, any monetary
obligation of such Person and its Subsidiaries under any leasing or similar
arrangement which has been (or, in accordance with GAAP, should be) classified
as a capitalized lease, and for purposes of each Loan Document the amount of
such obligation shall be the capitalized amount thereof, determined in
accordance with GAAP, and the stated maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
premium or a penalty.

“Cash Equivalent Investment” means, at any time:

(a) any direct obligation of (or unconditionally guaranteed by) the United
States or a State thereof (or any agency or political subdivision thereof, to
the extent such obligations are supported by the full faith and credit of the
United States or a State thereof) maturing not more than one year after such
time;

(b) commercial paper maturing not more than 270 days from the date of issue,
which is issued by

 

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(i) a corporation (other than an Affiliate of any Obligor) organized under the
laws of any State of the United States or of the District of Columbia and rated
A-1 or higher by S&P, P-1 or higher by Moody’s, or F-1 or higher from Fitch, or

(ii) any Lender (or its holding company);

(c) any certificate of deposit, time deposit or bankers acceptance, maturing not
more than one year after its date of issuance, which is issued by

(i) any bank organized under the laws of the United States (or any State
thereof) and which has (x) a credit rating of A2 or higher from Moody’s, A or
higher from S&P or A or higher from Fitch and (y) a combined capital and surplus
greater than $500,000,000, or

(ii) any Lender, or

(iii) Idaho Independent Bank (provided that the aggregate amount invested in all
such certificates of deposit, time deposit and bankers acceptances issued by
Idaho Independent Bank at any time shall not exceed $20,000,000); or

(d) any repurchase agreement having a term of 30 days or less entered into with
any Lender or any commercial banking institution satisfying the criteria set
forth in clause (c)(i) which

(i) is secured by a fully perfected security interest in any obligation of the
type described in clause (a), and

(ii) has a market value at the time such repurchase agreement is entered into of
not less than 100% of the repurchase obligation of such commercial banking
institution thereunder.

“Casualty Event” means the damage or destruction or any taking under power of
eminent domain or by condemnation or similar proceeding, as the case may be, of
property of any Person or any of its Subsidiaries.

“CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.

“CERCLIS” means the Comprehensive Environmental Response Compensation Liability
Information System List.

“Change in Control” means

(a) at any time any Person or Persons acting in concert, shall become the
“beneficial holder” (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act), directly or indirectly, of Voting Securities of the Parent representing
more than 50% of the issued and outstanding Voting Securities of the Parent on a
fully diluted basis;

 

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(b) during any period of 24 consecutive months commencing on or after the
Effective Date, individuals who at the beginning of such period constituted the
Board of Directors of the Parent (together with any new directors whose election
to such Board or whose nomination for election by the stockholders of the Parent
was approved by a vote of a majority of the directors then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of the Parent then in office;

(c) the occurrence of any “Change in Control” (or similar term) under (and as
defined in) any Subordinated Debt Document or Designated Preferred Stock
Document; or

(d) the failure of the Parent at any time to directly or indirectly own
beneficially and of record on a fully diluted basis 100% of the outstanding
Capital Securities of each Borrower and each Subsidiary Guarantor, such Capital
Securities to be held free and clear of all Liens (other than Liens permitted
pursuant to clauses (a), (h) and (j) of Section 7.2.3).

“Code” means the Internal Revenue Code of 1986, and the regulations thereunder,
in each case as amended, reformed or otherwise modified from time to time.

“Collateral” means all of the collateral referred to in the Loan Documents or
that is intended to be subject to Liens in favor of the Administrative Agent
pursuant to Section 7.1.8.

“Commitment” means with respect to each Lender, such Lender’s obligation to make
its Loans pursuant to Section 2.1.

“Commitment Amount” means, on any date, $60,000,000, as such amount may be
reduced from time to time pursuant to Section 2.2.

“Commitment Termination Date” means the earliest of

(a) the Stated Maturity Date;

(b) the date on which the Commitment Amount is terminated in full or reduced to
zero pursuant to the terms of this Agreement; and

(c) the date on which any Commitment Termination Event occurs.

Upon the occurrence of any event described above, the Commitments shall
terminate automatically and without any further action.

“Commitment Termination Event” means

(a) the occurrence of any Event of Default relative to the Parent or the
Borrowers described in clauses (a) through (d) of Section 8.1.9; or

 

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(b) the occurrence and continuance of any other Event of Default and either
(i) the declaration of all or any portion of the Loans to be due and payable
pursuant to Section 8.3 or (ii) the giving of notice by the Administrative
Agent, acting at the direction of the Required Lenders, to the Borrowers that
the Commitments have been terminated in accordance with Section 8.3.

“Compliance Certificate” means a certificate duly completed and executed by an
Authorized Officer of the Parent, substantially in the form of Exhibit E hereto,
together with such changes thereto as the Administrative Agent may from time to
time request for the purpose of monitoring the Parent’s compliance with the
financial covenants contained herein.

“Contingent Liability” means any agreement, undertaking or arrangement by which
any Person guarantees, endorses or otherwise becomes or is contingently liable
upon (by direct or indirect agreement, contingent or otherwise, to provide funds
for payment, to supply funds to, or otherwise to invest in, a debtor, or
otherwise to assure a creditor against loss) the Indebtedness of any other
Person (other than by endorsements of instruments in the course of collection),
or guarantees the payment of dividends or other distributions upon the Capital
Securities of any other Person or is liable to maintain the solvency or any
balance sheet item, level of income or financial condition of any other Person
for the purpose of assuring a creditor against loss. The amount of any Person’s
obligation under any Contingent Liability shall (subject, however, to any
limitation set forth therein) be deemed to be the outstanding principal amount
of the debt, obligation or other liability guaranteed thereby.

“Continuation/Conversion Notice” means a notice of continuation or conversion
and certificate duly executed by an Authorized Officer of a Borrower,
substantially in the form of Exhibit C hereto.

“Controlled Group” means all members of a controlled group of corporations and
all members of a controlled group of trades or businesses (whether or not
incorporated) under common control which, together with the Parent, are treated
as a single employer under Section 414(b) or 414(c) of the Code or Section 4001
of ERISA.

“Credit Extension” means the making of Loans by a Lender.

“Current Assets” means the total assets which would properly be classified in
accordance with Section 1.5 as consolidated current assets of the Parent and its
Subsidiaries.

“Current GAAP Financials” is defined in Section 1.5.

“Current Liabilities” means the total liabilities which would properly be
classified in accordance with Section 1.5 as consolidated current liabilities of
the Parent and its Subsidiaries (other than the current portion of outstanding
Indebtedness of the Parent and its Subsidiaries that matures more than one year
from the date of its creation (including the Loans) or matures within one year
from such date and is renewable or extendable, at the option of the Parent or
one of its Subsidiaries, to a date more than one year from such date).

“Current Ratio” means, at any time, the ratio of:

(a) Current Assets at such time;

 

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to

(b) Current Liabilities at such time.

“Deed of Trust” means that certain Amended and Restated Deed of Trust with Power
of Sale, Assignment of Production, Security Agreement, Financing Statement and
Fixture Filing, dated as of October 14, 2009, among the Borrowers, as trustors,
First American Title Insurance Company, as trustee, and The Bank of Nova Scotia
Trust Company of New York, as beneficiary.

“Default” means any Event of Default or any condition, occurrence or event
which, after notice or lapse of time or both, would constitute an Event of
Default.

“Defaulting Lender” means any Lender that (a) has failed to fund any portion of
the Loans required to be funded by it hereunder within one Business Day of the
date required to be funded by it hereunder, (b) has otherwise failed to pay over
to the Administrative Agent or any other Lender any other amount required to be
paid by it hereunder within one Business Day of the date when due, unless the
subject of a good faith dispute, or (c) has been deemed insolvent or become the
subject of a bankruptcy or insolvency proceeding.

“Designated Preferred Stock” means preferred stock of the Parent (a) which does
not require any scheduled redemption within one year following the Stated
Maturity Date, (b) with respect to which dividends may not be declared, paid or
funds set aside for payment thereof following the occurrence and during the
continuance of a Default and (c) either contains (i) terms that are not more
onerous on the Parent than the terms of its Series B Preferred Stock or its 6.5%
Mandatory Convertible Preferred Stock or (ii) covenants, redemption events,
redemption provisions and other terms that are, in the reasonable judgment of
the Required Lenders, customary for comparable issuances of preferred stock.

“Designated Preferred Stock Documents” means, collectively, the certificate of
designations, purchase agreements and other instruments and agreements
evidencing the terms of Designated Preferred Stock, as amended, supplemented,
amended and restated or otherwise modified in accordance with Section 7.2.11.

“Disclosure Schedule” means the Disclosure Schedule attached hereto as Schedule
I, as it may be amended, supplemented, amended and restated or otherwise
modified from time to time by the Parent and the Borrowers with the written
consent of the Required Lenders.

“Disposition” (or similar words such as “Dispose”) means, with respect to any
Person, any sale, transfer, lease, contribution or other conveyance (including
by way of merger) of, or the granting of options, warrants or other rights to,
any of such Person’s assets (including accounts receivable and Capital
Securities of such Person’s Subsidiaries) or Approvals to any other Person in a
single transaction or series of transactions.

“Dollar” and the sign “$” mean lawful money of the United States.

 

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“Domestic Office” means, relative to any Lender, the office of such Lender
designated as its “Domestic Office” on Schedule II or in a Lender Assignment
Agreement, or such other office within the United States as may be designated
from time to time by notice from such Lender to the Administrative Agent and the
Parent and the Borrowers.

“Earn-out Obligations” is defined in the definition of Indebtedness.

“EBITDA” means, for any applicable period, the sum of

(a) Net Income (exclusive of all amounts in respect of any gains and losses
realized from Dispositions other than inventory Disposed of in the ordinary
course of business), plus

(b) to the extent deducted in determining Net Income, the sum, without
duplication, of (i) amounts attributable to amortization and depreciation of
assets, (ii) income tax expense, (iii) Interest Expense, (iv) non-cash charges
(other than write-downs of accounts receivable) and (v) expenses paid in respect
of any consummated Permitted Acquisition to the extent such expenses previously
would have been permitted to be capitalized in accordance with GAAP as in effect
on December 31, 2007, minus

(c) to the extent added in determining Net Income, the sum, without duplication,
of (i) interest income paid during such period to the Parent and its
Subsidiaries, (ii) non-cash gains, (iii) the income of any Person (other than a
Subsidiary of the Parent) in which the Parent or any of its Subsidiaries has an
ownership interest, except to the extent that any such income is actually
received by the Parent or such Subsidiary in the form of dividends or similar
distributions, (iv) the income of any Subsidiary of the Parent (other than any
Borrower or any Subsidiary Guarantor) to the extent that the declaration or
payment of dividends or similar distributions by such Subsidiary is not at the
time permitted by the terms of any contractual obligation (other than under the
Loan Documents) or requirement of law applicable to such Subsidiary, (v) the
income (or deficit) of any Person accrued prior to the date it became a
Subsidiary of, or was merged or consolidated into, the Parent or any of the
Parent’s Subsidiaries and (vi) any restoration to income of any contingency
reserve, except to the extent that provision for such reserve was made out of
income accrued during such period, minus

(d) the amount of all cash payments made in such period to the extent that such
payments relate to a non-cash charge incurred in a previous period that was
added back in determining EBITDA hereunder pursuant to the preceding clause
(b)(iv).

“Effective Date” means the date this Agreement becomes effective pursuant to
Section 5.1.

“Effective Date Certificate” means the effective date certificate executed and
delivered by an Authorized Officer of the Parent, substantially in the form of
Exhibit D hereto.

“Eligible Assignee” means (a) a Lender; (b) an Affiliate of a Lender; (c) an
Approved Fund; or (d) any other Person (other than a natural Person, the Parent,
any Affiliate of the Parent or any other Person taking direction from, or
working in concert with, the Parent or any of the Parent’s Affiliates).

 

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“Environmental Law” means all present and future Applicable Laws imposing
liability or standards of conduct relating to the environment, industrial
hygiene, land use or the protection of human health and safety, natural
resources, pollution (including Hazardous Materials) or waste management,
including laws relating to reclamation of land and waterways.

“Equity Incentive Plans” means the Hecla Mining Company 1995 Stock Incentive
Plan, as amended, the Hecla Mining Company Stock Plan for Nonemployee Directors,
as amended, and the Hecla Mining Company Key Employee Deferred Compensation
Plan, as amended.

“ERISA” means the Employee Retirement Income Security Act of 1974, and any
successor statute thereto of similar import, together with the regulations
thereunder, in each case as in effect from time to time. References to Sections
of ERISA also refer to any successor Sections thereto.

“Event of Default” is defined in Section 8.1.

“Excess Cash Flow” means, for any Fiscal Year, the excess (if any), of

(x) EBITDA for such Fiscal Year;

minus

(y) the sum (for such Fiscal Year) of (A) Interest Expense actually paid in cash
by the Parent and Subsidiaries, plus (B) the aggregate principal amount of all
regularly scheduled principal payments or redemptions or similar acquisitions
for value of outstanding debt for borrowed money, but excluding any such
payments to the extent refinanced through the incurrence of additional
Indebtedness otherwise expressly permitted under Section 7.2.2 and Indebtedness
that has been paid but may be reborrowed on a revolving credit basis plus
(C) all income Taxes actually paid in cash by the Parent and Subsidiaries plus
(D) Capital Expenditures made in cash (excluding, however, Capital Expenditures
financed with the proceeds of Indebtedness (other than the Obligations), equity
issuances, casualty proceeds or other proceeds which are not included in EBITDA)
plus (E) reclamation expenses actually paid in cash by the Parent and its
Subsidiaries (excluding, however, reclamation expenses financed with the
proceeds of insurance).

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Exemption Certificate” is defined in clause (e) of Section 4.6.

“Existing Credit Agreement” is defined in the recitals hereto.

“Federal Funds Rate” means, for any period, a fluctuating interest rate per
annum equal for each day during such period to

 

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(a) the weighted average of the rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York; or

(b) if such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by the
Administrative Agent from three federal funds brokers of recognized standing
selected by it.

“Fee Letters” means (i) the confidential agent’s fee letter, dated October 14,
2009, among Scotiabank, the Parent and the Borrowers and (ii) the confidential
lenders’ fee letter, dated October 14, 2009, among Scotiabank, ING Capital LLC,
the Parent and the Borrowers.

“Filing Agent” is defined in Section 5.1.8.

“Filing Statements” is defined in Section 5.1.8.

“Fiscal Quarter” means a quarter ending on the last day of March, June,
September or December.

“Fiscal Year” means any period of twelve consecutive calendar months ending on
December 31; references to a Fiscal Year with a number corresponding to any
calendar year (e.g., the “2009 Fiscal Year”) refer to the Fiscal Year ending on
December 31 of such calendar year.

“Fitch” means Fitch, Inc.

“Foreign Pledge Agreement” means any supplemental pledge agreement governed by
the laws of a jurisdiction other than the United States or a State thereof
executed and delivered by the Parent or any Subsidiary pursuant to the terms of
this Agreement, in form and substance satisfactory to the Administrative Agent,
as may be necessary or desirable under the laws of organization or incorporation
of a Subsidiary to further protect or perfect the Lien on any Collateral (as
defined in the Security Agreement).

“Foreign Subsidiary” means any Subsidiary that is not a U.S. Subsidiary.

“F.R.S. Board” means the Board of Governors of the Federal Reserve System or any
successor thereto.

“Funds Available for Specified Investments” means, for any date of
determination, the result of

(v) Excess Cash Flow for the Fiscal Year most recently ended (“Prior FY Excess
Cash Flow”);

minus

 

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(w) the amount of Prior FY Excess Cash Flow applied to Specified Investments
during the Fiscal Year in which such date of determination occurs;

minus

(x) the amount of Prior FY Excess Cash Flow applied to Restricted Payments
(other than Restricted Payments under Section 7.2.6(h)) during the Fiscal Year
in which such date of determination occurs;

plus

(y) (i) the aggregate amount of Net Equity/Debt Proceeds to be applied to fund
Specified Investments and not otherwise applied and (ii) any Commitments
available under this Agreement

plus

(z) the aggregate amount of Net Casualty Proceeds not used to prepay the Loans
pursuant to Section 3.1.1(c) and not otherwise applied.

“Funds Available for Restricted Payments” means, for any date of determination,
the result of

(w) Prior FY Excess Cash Flow;

minus

(x) the amount of Prior FY Excess Cash Flow applied to Specified Investments
during the Fiscal Year in which such date of determination occurs;

minus

(y) the amount of Prior FY Excess Cash Flow applied to Restricted Payments
during the Fiscal Year in which such date of determination occurs (other than
Restricted Payments under Section 7.2.6(h));

plus

(z) the aggregate amount of Net Equity/Debt Proceeds to be applied to fund
Restricted Payments and not otherwise applied.

“GAAP” is defined in Section 1.5.

“Gold Participation Bond” means the private placement of up to $60,000,000 in
gold participation bonds issued by Parent or a Subsidiary of the Parent (other
than the Borrowers and Hecla Admiralty), the terms and conditions of which shall
(x) not be any more restrictive to any Obligor than the terms of the Loan
Documents and (y) otherwise be satisfactory to each Lender in its sole and
absolute discretion.

 

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“Governmental Authority” means the government of the United States, any other
nation or any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other Person exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

“Greens Creek Demand Note” means, collectively, the demand notes evidencing
intercompany Indebtedness owed by the Borrowers to the Parent, which notes are
each in form and substance reasonably satisfactory to the Administrative Agent
and pledged to the Administrative Agent pursuant to the Security Agreement.

“Greens Creek Group” means, collectively, the Borrowers and Hecla Admiralty.

“Greens Creek Joint Venture” means the joint venture among the Borrowers as
governed by the terms of the Greens Creek Joint Venture Agreement.

“Greens Creek Joint Venture Agreement” means the Restated Mining Venture
Agreement, dated as of May 6, 1994, by and among Hecla Greens Creek, Hecla
Alaska and Hecla Juneau, as amended, supplemented, amended and restated or
otherwise modified from time to time in accordance with the terms thereof and
hereof.

“Greens Creek Manager” means Hecla Greens Creek, or any successor manager
appointed under the Greens Creek Joint Venture Agreement.

“Greens Creek Mine” means the mine located on Admiralty Island, near Juneau,
Alaska, that is owned and operated pursuant to the Greens Creek Joint Venture
Agreement by the Borrowers.

“Hazardous Material” means (w) any substances that are defined or listed in, or
otherwise classified pursuant to, any applicable Environmental Laws as
“hazardous substances”, “hazardous materials”, “hazardous wastes”, “toxic
substances”, “contaminants”, “pollutants” or any other formulation intended to
define, list or classify substances by reason of adverse effects on the
environment or deleterious properties such as ignitability, corrosivity,
reactivity, carcinogenicity, reproductive toxicity or “TLCP” toxicity or “EP”
toxicity; (x) any oil, petroleum or petroleum-derived substances, natural gas,
natural gas liquids or synthetic gas and drilling fluids, produced waters and
other wastes associated with the exploration, development or production of crude
oil, natural gas or geothermal resources; (y) any flammable substances or
explosives or any radioactive materials; or (z) any asbestos in any form or
electrical equipment which contains any oil or dielectric fluid containing
levels of polychlorinated biphenyls in excess of fifty parts per million.

“Hecla Admiralty” means Hecla Admiralty Company, a Delaware corporation.

“Hecla Alaska” is defined in the preamble.

 

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“Hecla Greens Creek” is defined in the preamble.

“Hecla Juneau” is defined in the preamble.

“Hecla Limited” means Hecla Limited, a Delaware corporation.

“Hecla Mine Plan” means, with respect to all operating mines controlled by the
Parent (including any of its Subsidiaries), a life of mine plan prepared by the
Parent setting forth on a consolidated basis and separately with respect to each
mine, inter alia, annual operating, capital and exploration budgets; proposed
construction, development, operation and closing of such mines and any
rehabilitation or reclamation work related thereto; exploitation, treatment,
production, marketing and sale of all metals recovered from such mines; and all
administrative, technical, financial and commercial activities related thereto.
The Hecla Mine Plan shall be updated annually and delivered to the
Administrative Agent, in each case in accordance with clause (l) of
Section 7.1.1.

“Hedging Agreements” means currency exchange agreements, interest rate swap
agreements, interest rate cap agreements, interest rate collar agreements,
commodity hedging agreements, commodity swap, exchange or futures agreements,
and all other agreements or arrangements designed to protect such Person against
fluctuations in interest rates, currency exchange rates or commodity prices.

“Hedging Obligations” means, with respect to any Person, all liabilities of such
Person under Hedging Agreements.

“Immaterial Subsidiary” means, on any date, a Subsidiary of the Parent which
(a) was not designated as a “Material Subsidiary” on Item 1.1(a) of the
Disclosure Schedule or (b) is notified to the Lenders as being an “Immaterial
Subsidiary” pursuant to a certificate executed by an Authorized Officer of the
Parent certifying to each of the items set forth in the immediately succeeding
proviso; provided that a Subsidiary shall not be an Immaterial Subsidiary if
(i) its assets exceeded $2,000,000 as of the last day of the most recently
completed Fiscal Quarter, (ii) its revenues exceeded $1,000,000 for the most
recently completed Fiscal Quarter, (iii) the assets of all Immaterial
Subsidiaries exceeded $10,000,000 as of the last day of the most recently
completed Fiscal Quarter, (iv) the aggregate revenue of all Immaterial
Subsidiaries exceeded $2,000,000 for the most recently completed Fiscal Quarter
or (v) the Parent or any Material Subsidiary is providing any credit support
for, or a guarantee of, any obligations of such Subsidiary; provided further
that, in the event all Subsidiaries otherwise designated as Immaterial
Subsidiaries by the Parent should not be Immaterial Subsidiaries as a result of
clause (iii) or (iv) of the immediately preceding proviso and the Parent has not
designated which Subsidiaries (or Subsidiary) should no longer constitute
Immaterial Subsidiaries pursuant to the Compliance Certificate most recently
delivered pursuant to clause (c) of Section 7.1.1 or notice delivered pursuant
to Section 7.1.10, the Administrative Agent may designate which Subsidiaries (or
Subsidiary) no longer constitute Immaterial Subsidiaries. In no event shall
Hecla Limited, any Person in the Greens Creek Group nor any Person directly or
indirectly holding Capital Securities in the Greens Creek Group be an Immaterial
Subsidiary.

 

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“Impermissible Qualification” means any qualification or exception to the
opinion or certification of any independent public accountant as to any
financial statement of the Parent

(a) which is of a “going concern” or similar nature;

(b) which relates to the limited scope of examination of matters relevant to
such financial statement;

(c) which relates to the treatment or classification of any item in such
financial statement and which, as a condition to its removal, would require an
adjustment to such item the effect of which would be to cause a Default; or

(d) which, to the extent the Parent shall be subject to the provisions of
Sarbanes-Oxley and the rules and regulations of the SEC promulgated thereunder,
relates to an attestation report of such independent public accountant as to the
Parent’s internal controls over financial reporting pursuant to Section 404 of
Sarbanes-Oxley, except to the extent any such qualification or exception (i) is
permitted under rules or regulations promulgated by the SEC or the Public
Company Accounting Oversight Board, (ii) has appeared in the attestation report
described in the Parent’s Annual Report on Form 10-K for the 2007 Fiscal Year or
the 2008 Fiscal Year, (iii) does not, in the reasonable judgment of the Required
Lenders, create a reasonable doubt as to the accuracy of any item or items in
the financial statements furnished by the Parent that, if corrected, would cause
a Default or (iv) is otherwise acceptable to the Required Lenders.

“Indebtedness” of any Person means, without duplication:

(a) all obligations of such Person for borrowed money or advances or borrowed
metals and all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, including Subordinated Debt, the Gold Participation
Bonds (if any), performance bonds and reclamation bonds;

(b) all obligations, contingent or otherwise, relative to the face amount of all
letters of credit, whether or not drawn, and banker’s acceptances issued for the
account of such Person;

(c) all Capitalized Lease Liabilities of such Person;

(d) for purposes of Section 8.1.5 only, all other items which, in accordance
with GAAP, would be included as indebtedness on the liabilities side on the
balance sheet of such Person as of the date at which Indebtedness is to be
determined;

(e) net Hedging Obligations (including any negative mark-to-market amounts) of
such Person;

(f) whether or not so included as liabilities in accordance with GAAP, (i) all
obligations of such Person to pay the deferred purchase price of property or
services (excluding trade accounts payable in the ordinary course of business
which are not overdue for a period of more than 90 days or, if overdue for more
than 90 days, as to

 

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which a dispute exists and adequate reserves in conformity with GAAP have been
established on the books of such Person), including obligations of such Person
(“Earn-out Obligations”) in respect of “earn-outs” or other similar contingent
payments (whether based on revenue or otherwise) arising from the acquisition of
a business or line of business pursuant to a Permitted Acquisition and payable
to the seller or sellers thereof, and (ii) indebtedness secured by (or for which
the holder of such indebtedness has an existing right, contingent or otherwise,
to be secured by) a Lien on property owned or being acquired by such Person
(including indebtedness arising under conditional sales or other title retention
agreements), whether or not such indebtedness shall have been assumed by such
Person or is limited in recourse;

(g) obligations arising under Synthetic Leases;

(h) the stated liquidation value of Redeemable Capital Securities of such
Person; and

(i) all Contingent Liabilities of such Person in respect of any of the
foregoing.

The Indebtedness of any Person shall include the Indebtedness of any other
Person (including any partnership in which such Person is a general partner) to
the extent such Person is liable therefor as a result of such Person’s ownership
interest in or other relationship with such Person, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.

“Indemnified Liabilities” is defined in Section 10.4.

“Indemnified Parties” is defined in Section 10.4.

“Interco Subordination Agreement” means the Subordination Agreement,
substantially in the form of Exhibit I hereto, executed and delivered by two or
more Obligors pursuant to the terms of this Agreement, as amended, supplemented,
amended and restated or otherwise modified from time to time.

“Interest Coverage Ratio” means, as of the last day of any Fiscal Quarter, the
ratio, computed for the period consisting of such Fiscal Quarter and each of the
three immediately preceding Fiscal Quarters, of:

(a) EBITDA for such period;

to

(b) Interest Expense for such period.

“Interest Expense” means, for any applicable period, calculated in accordance
with Section 1.5, the aggregate interest expense of the Parent and its
Subsidiaries for such applicable period, and shall include (i) the portion of
any payments made in respect of Capitalized Lease Liabilities allocable to
interest expense, (ii) dividends declared on Designated Preferred Stock (except
to the extent payable in additional shares of Designated Preferred Stock or
shares of the Parent’s common stock) and (iii) the portion of any cash payments
made in respect of the Gold Participation Bonds (if any) allocable to interest
expense.

 

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“Interest Period” means, relative to any LIBO Rate Loan, the period beginning on
(and including) the date on which such LIBO Rate Loan is made or continued as,
or converted into, a LIBO Rate Loan pursuant to Sections 2.3 or 2.5 and shall
end on (but exclude) the day which numerically corresponds to such date one,
two, three or six months thereafter (or, if such month has no numerically
corresponding day, on the last Business Day of such month), as the Borrowers may
select in its relevant notice pursuant to Sections 2.3 or 2.5; provided that,

(a) the Borrowers shall not be permitted to select Interest Periods to be in
effect at any one time which have expiration dates occurring on more than five
different dates;

(b) if such Interest Period would otherwise end on a day which is not a Business
Day, such Interest Period shall end on the next following Business Day (unless
such next following Business Day is the first Business Day of a calendar month,
in which case such Interest Period shall end on the Business Day next preceding
such numerically corresponding day); and

(c) no Interest Period for any Loan may end later than the Stated Maturity Date
for such Loan.

“Investment” means, relative to any Person,

(a) any loan, advance or extension of credit made by such Person to any other
Person, including the purchase by such Person of any bonds, notes, debentures or
other debt securities of any other Person;

(b) Contingent Liabilities in favor of any other Person;

(c) any Capital Securities held by such Person in any other Person; and

(d) the purchase or other acquisition (in one transaction or a series of
transactions) of material assets of another Person other than in the ordinary
course of business.

The amount of any Investment shall be excess of the original principal or
capital amount thereof minus all realized returns of principal or equity thereon
and shall, if made by the transfer or exchange of property other than cash, be
deemed to have been made in an original principal or capital amount equal to the
fair market value of such property at the time of such Investment.

“Land Exchange Agreement” means the Land Exchange Agreement, dated as of
December 14, 1994, between Hecla Greens Creek and the United States, by and
through the U.S. Department of Agriculture Forest Service, as amended or
otherwise modified from time to time.

“Lender Assignment Agreement” means an assignment agreement substantially in the
form of Exhibit J hereto.

 

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“Lender Hedging Agreement” means any Hedging Agreement entered into by the
Parent or a Borrower under which the counterparty of such agreement is a Lender,
the Administrative Agent, or an Affiliate of a Lender or the Administrative
Agent.

“Lenders” is defined in the preamble.

“Lender’s Environmental Liability” means any and all losses, liabilities,
obligations, penalties, claims, litigation, demands, defenses, costs, judgments,
suits, proceedings, damages (including consequential damages), reasonable
disbursements or expenses of any kind or nature whatsoever (including reasonable
attorneys’ fees at trial and appellate levels and reasonable experts’ fees and
disbursements and expenses incurred in investigating, defending against or
prosecuting any litigation, claim or proceeding) which may at any time be
imposed upon, incurred by or asserted or awarded against the Administrative
Agent or any Lender or any of such Person’s Affiliates, shareholders, directors,
officers, employees, and agents in connection with or arising from:

(a) any Hazardous Material on, in, under or affecting all or any portion of any
property of the Parent or any of its Subsidiaries, the groundwater thereunder,
or any surrounding areas thereof to the extent caused by Releases from the
Parent’s or any of its Subsidiaries’ or any of their respective predecessors’
properties;

(b) any misrepresentation, inaccuracy or breach of any warranty, contained or
referred to in Section 6.12 (without regard to “knowledge” or “materiality”
qualifications or exceptions contained in such representations or warranties);

(c) any violation or claim of violation by the Parent or any of its Subsidiaries
of any Environmental Laws; or

(d) the imposition of any lien for damages caused by or the recovery of any
costs for the cleanup, release or threatened release of Hazardous Material by
the Parent or any of its Subsidiaries, or in connection with any property owned
or formerly owned by the Parent or any of its Subsidiaries.

“Leverage Ratio” means, as of the last day of any Fiscal Quarter, the ratio of

(a) Total Debt outstanding on the last day of such Fiscal Quarter;

to

(b) EBITDA computed for the period consisting of such Fiscal Quarter and each of
the three immediately preceding Fiscal Quarters.

“LIBO Rate” means, relative to any Interest Period for LIBO Rate Loans, the sum
of the rate per annum for any Interest Period fixed each day at 11:00 a.m.
(London time) determined by the British Bankers Association as the London
Interbank Offered Rate for dollar deposits and published at Reuters Screen
LIBOR01 Page two Business Days prior to the commencement of such Interest Period
(rounded upward, if necessary, to the nearest 1/16th of 1%); provided, however,
that, in the event that such rate is not available on Reuters Screen LIBOR01
Page, the

 

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“LIBO Rate” shall be determined by reference to such other comparable publicly
available service for displaying eurodollar rates as may be selected by the
Administrative Agent or, in the absence of such availability, by reference to
the rate per annum at which the Administrative Agent is offering Dollar deposits
of comparable amounts at or about 10:00 a.m., New York time, two Business Days
prior to the beginning of such Interest Period in the interbank eurodollar
market where its eurodollar and foreign currency and exchange operations are
then being conducted for delivery in immediately available funds on the first
day of such Interest Period for the number of days comprised therein.

“LIBO Rate Loan” means a Loan bearing interest, at all times during an Interest
Period applicable to such Loan, at a rate of interest determined by reference to
the LIBO Rate (Reserve Adjusted).

“LIBO Rate (Reserve Adjusted)” means, relative to any Loan to be made, continued
or maintained as, or converted into, a LIBO Rate Loan for any Interest Period, a
rate per annum (rounded upwards, if necessary, to the nearest 1/16 of 1%)
determined pursuant to the following formula:

 

LIBO Rate       =       

LIBO Rate

      (Reserve Adjusted)            1.00 - LIBOR Reserve Percentage            

The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO Rate Loans
will be determined by the Administrative Agent on the basis of the LIBOR Reserve
Percentage in effect two Business Days before the first day of such Interest
Period.

“LIBO Rate Unavailability Period” means any period of time during which a notice
delivered to the Borrower in accordance with Section 4.2 shall remain in force
and effect.

“LIBOR Office” means, relative to any Lender, the office of a Lender designated
as its “LIBOR Office” on Schedule II or in a Lender Assignment Agreement, or
such other office designated from time to time by notice from such Lender to the
Borrowers and the Administrative Agent, whether or not outside the United
States, which shall be making or maintaining the LIBO Rate Loans of such Lender.

“LIBOR Reserve Percentage” means, relative to any Interest Period for LIBO Rate
Loans, the reserve percentage (expressed as a decimal) equal to the maximum
aggregate reserve requirements (including all basic, emergency, supplemental,
marginal and other reserves and taking into account any transitional adjustments
or other scheduled changes in reserve requirements) specified under regulations
issued from time to time by the F.R.S. Board and then applicable to assets or
liabilities consisting of or including “Eurocurrency Liabilities”, as currently
defined in Regulation D of the F.R.S. Board, having a term approximately equal
or comparable to such Interest Period.

“Lien” means any security interest, mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other) or preference,
priority or other security agreement, whether or not filed, recorded or
otherwise perfected under Applicable Law (including without limitation, any
encumbrance arising with respect to any mineral royalty or similar obligation).

 

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“Loans” is defined in Section 2.1.

“Loan Documents” means, collectively, this Agreement, the Notes, the Fee
Letters, the Security Agreement, the Pledge Agreement, the Deed of Trust and
each other agreement pursuant to which the Administrative Agent is granted a
Lien to secure the Obligations, the Subsidiary Guaranty, the Parent Guaranty,
and each other agreement, certificate, document or instrument (other than any
Lender Hedging Agreement) delivered in connection with any Loan Document,
whether or not specifically mentioned herein or therein.

“Lucky Friday Mine” means the deep underground silver, lead and zinc mine
located in the Coeur d’Alene Mining District in northern Idaho one-quarter mile
east of Mullan, Idaho, and that is owned and operated by Hecla Limited.

“Material Adverse Change” means any change since December 31, 2008, or any
additional information disclosed to or discovered since December 31, 2008, that
has had or could reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect.

“Material Adverse Effect” means a material adverse effect on (a) the business,
property, operations, assets, liabilities, condition (financial or otherwise) of
the Parent and its Subsidiaries taken as a whole, (b) the rights and remedies of
any Secured Party under any Loan Document or (c) the ability of any Obligor to
perform its Obligations under any Loan Document.

“Material Contract” means, relative to any Obligor, each contract (other than
any Loan Document or Lender Hedging Agreement) to which such Obligor is a party
or by which any of its property is bound or subject involving aggregate
consideration payable to or by it of $10,000,000 or more in any Fiscal Year or
otherwise material to the business or operations of the Parent or its
Subsidiaries.

“Material Subsidiary” means, on any date, a Subsidiary of the Parent which is
not (i) an Immaterial Subsidiary, (ii) Hecla Charitable Foundation, (iii) Middle
Buttes Partners Ltd., or (iv) any Borrower.

“Material U.S. Subsidiary” means, on any date, a Material Subsidiary of the
Parent that is a U.S. Subsidiary.

“Mining Rights” means all interests in the surface of any lands, the minerals in
(or that may be extracted from) any lands, all royalty agreements, water rights,
patented and unpatented mining and millsite claims, fee interests, mineral
leases, mining licenses, profits-a-prendre, joint ventures and other leases,
rights-of-way, inurements, licenses and other rights and interests used by or
necessary to (x) the Greens Creek Joint Venture to operate the Greens Creek Mine
or (y) the Parent and its Subsidiaries in the conduct of their mining and
related processing operations.

“Moody’s” means Moody’s Investors Service, Inc.

 

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“Multiemployer Plan” means a “multiemployer plan” as defined in
Section 4001(a)(3) of ERISA for which the Parent or any member of its Controlled
Group has contributed to, or has been obligated to contribute to, at any time
during the preceding six (6) years.

“Net Casualty Proceeds” means, relative to any Casualty Event, the amount of any
insurance proceeds or condemnation (or similar) awards received by the Borrower
or any Subsidiary Guarantor in connection with such Casualty Event (net of all
reasonable and customary collection expenses thereof), excluding, however, any
proceeds or awards required to be paid to a creditor (other than the Lenders)
which holds a first priority Lien permitted by clause (b), (d), (e), (f), (h),
(j) or (k) of Section 7.2.3 on the property which is the subject of such
Casualty Event.

“Net Disposition Proceeds” means, relative to any Disposition by the Parent or
any Subsidiary pursuant to clause (e) of Section 7.2.10, the excess of (x) the
gross cash proceeds received by the Parent or such Subsidiary from such
Disposition and any cash payment received in respect of promissory notes or
other non-cash consideration delivered to the Parent or such Subsidiary in
respect thereof, minus (y) the sum of (1) all reasonable and customary legal,
investment banking, brokerage and accounting fees and expenses incurred in
connection with such Disposition, plus (2) all Taxes actually paid or estimated
by the Parent or such Subsidiary to be payable in cash within the next 12 months
in connection with such Disposition plus (3) payments required to be made to a
creditor (other than the Lenders) which holds a first priority Lien permitted by
clause (b), (d), (e) (f), (h), (j) or (k) of Section 7.2.3 on the property which
is subject to such Disposition; provided, however, that, if the amount of any
estimated Taxes pursuant to clause (y)(2) exceeds the amount of Taxes actually
required to be paid in cash in respect of such Disposition in an amount greater
than $100,000, the aggregate amount of such excess shall constitute Net
Disposition Proceeds.

“Net Equity/ Debt Proceeds” means, relative to (a) the sale or issuance after
the Effective Date by the Parent of its Capital Securities or warrants or
options to acquire such Capital Securities or the exercise of any such warrants
or options or the contribution to the capital of the Parent after the Effective
Date (in each case other than with respect to the Equity Incentive Plans,
dividends or other distributions paid in common stock of the Parent, conversions
of convertible securities or Investments made in common stock of the Parent, in
each case to the extent permitted hereunder) or (b) the issuance after the
Effective Date by the Parent of Indebtedness, in each case to the extent
permitted hereunder, the excess of (x) the gross cash proceeds received by such
Person from such sale, exercise, issuance or contribution minus (y) all
reasonable and customary underwriting commissions and legal, investment banking,
brokerage and accounting and other professional fees, sales commissions and
disbursements actually incurred in connection with such sale, issuance, exercise
or contribution which have not been paid to Affiliates of the Parent in
connection therewith.

“Net Income” means, for any period, calculated in accordance with Section 1.5,
the aggregate of all amounts which would be included as net income on the
consolidated financial statements of the Parent for such period; provided that:

(x) Net Income shall include, for purposes of clause (a) of Section 7.2.4, all
amounts in respect of any extraordinary gains and extraordinary losses, but
exclude, for all other purposes, all amounts in respect of any extraordinary
gains and extraordinary losses; and

 

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(y) notwithstanding the foregoing, Net Income shall include the revenue (and any
gain or loss) attributable to the delivered gold under the Gold Participation
Bonds.

“Non-Excluded Taxes” means any Taxes other than net income and franchise Taxes
imposed with respect to any Secured Party by any Governmental Authority under
the laws of which such Secured Party is organized or in which it maintains its
applicable lending office.

“Non-U.S. Lender” means any Lender that is not a “United States person”, as
defined under Section 7701(a)(30) of the Code.

“Note” means a promissory note of the Borrowers payable to any Lender, in the
form of Exhibit A hereto (as such promissory note may be amended, endorsed or
otherwise modified from time to time), evidencing the aggregate Indebtedness of
such Borrower to such Lender resulting from outstanding Loans, and also means
all other promissory notes accepted from time to time in substitution therefor
or renewal thereof.

“Obligation” means each obligation (monetary or otherwise, whether absolute or
contingent, matured or unmatured) of the Parent, the Borrowers or any other
Obligor arising under or in connection with (w) a Loan Document, including the
principal of and premium, if any, and interest (including interest accruing
during the pendency of any proceeding of the type described in Section 8.1.9,
whether or not allowed in such proceeding) on the Loans, (x) any doré or
concentrate purchase agreement under which the counterparty of such agreement is
a Lender, the Administrative Agent or any Affiliate of a Lender or the
Administrative Agent, (y) any agreement to provide cash management services
(including treasury, depository, overdraft, credit or debit card, electronic
funds transfer and other cash management arrangements) under which the
counterparty of such agreement is a Lender, the Administrative Agent or any
Affiliate of a Lender or the Administrative Agent, and (z) any Lender Hedging
Agreement; provided, however, with respect to any Obligation arising under the
foregoing clauses (x), (y) and (z), upon any counterparty to such agreement
ceasing to be a Lender, the Administrative Agent or any Affiliate of a Lender or
the Administrative Agent, the obligation of the Parent, the Borrowers or any
other Obligor owing to such Person thereunder shall no longer constitute an
Obligation.

“Obligor” means, as the context may require, the Parent, the Borrowers, the
Subsidiary Guarantors and each other Person (other than a Secured Party)
obligated under any Loan Document.

“OFAC” is defined in Section 6.3.

“Organic Document” means, relative to any Obligor, as applicable, its
certificate of incorporation, by-laws, certificate of partnership, partnership
agreement, certificate of formation, limited liability agreement, operating
agreement and all shareholder agreements, voting trusts and similar arrangements
applicable to any of such Obligor’s Capital Securities.

 

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“Other Taxes” means any and all stamp, documentary or similar Taxes, or any
other excise or property Taxes or similar levies that arise on account of any
payment made or required to be made under any Loan Document or from the
execution, delivery, registration, recording or enforcement of any Loan
Document.

“Parent” is defined in the preamble.

“Parent Guaranty” means the guaranty made by the Parent in favor of the
Administrative Agent and the Lenders, substantially in the form of Exhibit K.

“Participant” is defined in clause (e) of Section 10.11.

“PATRIOT Act” means the USA PATRIOT ACT (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)), as amended and supplemented from time to time.

“PATRIOT Act Disclosures” means all documentation and other information which
the Administrative Agent or any Lender reasonably requests in order to comply
with its ongoing obligations under applicable “know your customer” and
anti-money laundering rules and regulations, including the PATRIOT Act.

“PBGC” means the Pension Benefit Guaranty Corporation and any Person succeeding
to any or all of its functions under ERISA.

“Pension Plan” means a “pension plan”, as such term is defined in Section 3(2)
of ERISA, which is subject to Title IV of ERISA (other than a multiemployer plan
as defined in Section 4001(a)(3) of ERISA), and to which the Parent or any
corporation, trade or business that is, along with the Parent, a member of a
Controlled Group, may have liability, including any liability by reason of
having been a substantial employer within the meaning of Section 4063 of ERISA
at any time during the preceding five years, or by reason of being deemed to be
a contributing sponsor under Section 4069 of ERISA.

“Percentage” means, relative to any Lender, the applicable percentage relating
to its Commitment set forth opposite its name on Schedule II hereto or set forth
in a Lender Assignment Agreement, or after the Commitment Termination Date, its
percentage of the principal amount of Outstanding Loans, as such percentage may
be adjusted from time to time pursuant to Lender Assignment Agreements executed
by such Lender and its Assignee Lender and delivered pursuant to Section 10.11.
The Percentage on the Effective Date following the pay-down in full of the Loans
on such date will be 50% for each Lender.

“Permitted Acquisition” means an acquisition, whether of Capital Securities,
assets or otherwise, by the Parent or any Subsidiary of the Parent of a Person
or all or a substantial portion of the assets of, or a business or a line of
business from, any Person (by merger or consolidation or otherwise) in which the
following conditions are satisfied:

(a) immediately before and after giving effect to such acquisition no Default
shall have occurred and be continuing or would result therefrom (including under
Section 7.2.1);

 

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(b) such acquisition was not preceded by an unsolicited tender offer for the
Capital Securities of the Person subject to such acquisition by, or by a proxy
contest initiated by, the Parent or any of its Subsidiaries;

(c) if the consideration for such acquisition is not comprised solely of Capital
Securities (other than Redeemable Capital Securities) of the Parent (or of
proceeds of any such Capital Securities that are issued pursuant to a
substantially concurrent transaction), (i) in the case of an acquisition of a
Person or its Capital Securities, such Person becomes a Subsidiary of the Parent
as a result of such acquisition, and, in the case of an acquisition of assets,
such acquisition results in the Parent acquiring a controlling interest in such
assets, and (ii) the Parent shall have delivered to the Administrative Agent a
Compliance Certificate for the period of four full Fiscal Quarters immediately
preceding such acquisition (prepared in good faith and in a manner and using
such methodology which is consistent with the most recent financial statements
and Compliance Certificates delivered pursuant to Section 7.1.1) giving pro
forma effect to the consummation of such acquisition and all transactions
related thereto (including all Indebtedness that would be assumed or incurred as
a result thereof) and evidencing compliance with the covenants set forth in
Section 7.2.4 and certifying as to the satisfaction of the conditions set forth
in the preceding clauses of this definition; provided, however, that,
notwithstanding anything herein to the contrary, when determining compliance
with the covenants set forth in Section 7.2.4 for purposes of this definition,
(x) any non-recurring and one-time expenses included in the results of
operations of the business being acquired, taking into account standard industry
exploration, development and production spending patterns, may be excluded from
the calculations required by this clause (c) for any period prior to the date of
the consummation of such acquisition and (y) any projected increase in
operating, exploration or other costs of the Parent and its Subsidiaries as a
result of such acquisition shall be included in the calculations required by
this clause (c), in each case under clause (ii), in form and substance
reasonably satisfactory to the Administrative Agent; and

(e) promptly after the public disclosure of any proposed Permitted Acquisition,
in the case of any acquisition of any Person, assets, business or line of
business, the consideration (including cash and non-cash, actual or contingent )
for which exceeds $25,000,000, the Parent shall have furnished the
Administrative Agent with (x) historical financial statements for the last
Fiscal Year (or, if less, the period since formation relative to such Person,
assets, business or line of business (audited if available without undue cost or
delay) and unaudited financial statements thereof for the most recent interim
period which are available, (y) a reasonably detailed description of all
material information relating thereto and copies of all material documentation
relating thereto and copies of all material documentation pertaining to such
transaction and (z) all such other material information and data relating to
such transaction or the Person, assets, business or line of business to be
acquired, in each case in form and substance reasonably satisfactory to the
Administrative Agent.

“Permitted Additional Indebtedness” means Indebtedness of the Parent or any of
its Subsidiaries (other than the Borrowers and Hecla Admiralty) which is
incurred pursuant to Section 7.2.2(i) and which (a) does not require any
scheduled principal repayment within one

 

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year following the Stated Maturity Date, (b) is subject to terms and provisions
no more restrictive than those set forth in this Agreement, (c) has other
covenants, events of default, remedies, acceleration rights, redemption
provisions and other terms that are reasonably satisfactory to the Required
Lenders and that are set forth in the Permitted Debt Documents, (d) is
non-recourse to the Borrowers and (e) is not secured by any Lien, other than
Liens permitted under clause (l) of Section 7.2.3.

“Permitted Debt Documents” means any documents evidencing, guaranteeing or
otherwise governing Permitted Additional Indebtedness, as amended, supplemented,
amended and restated or otherwise modified in accordance with Section 7.2.11.

“Permitted Liens” means Liens permitted pursuant to Section 7.2.3.

“Person” means any natural person, corporation, limited liability company,
partnership, joint venture, association, trust or unincorporated organization,
Governmental Authority or any other legal entity, whether acting in an
individual, fiduciary or other capacity.

“Pledge Agreement” means the Third Amended and Restated Pledge Agreement
executed and delivered by an Authorized Officer of the Parent and each U.S.
Subsidiary holding Capital Securities of a Material U.S. Subsidiary or of a
Borrower and the Administrative Agent, substantially in the form of Exhibit G
hereto, as amended, supplemented, amended and restated or otherwise modified
from time to time.

“Pledged Foreign Subsidiary” means any Foreign Subsidiary that is a Material
Subsidiary with proven and probable reserves (in each case as determined in
accordance with the standards established from time to time by the SEC.)

“PPSA” means, the Personal Property Security Act, R.S.O. 1990 c.P.10 as
heretofore and hereafter amended and in effect in the Province of Ontario, or,
where the context requires, the legislation of the other provinces or
territories of Canada, including without limitation the Civil Code of Quebec for
the Province of Quebec, relating to security in personal property generally,
including accounts receivable, as adopted by and in effect from time to time in
such provinces or territories in Canada, as applicable.

“Prior GAAP Financials” is defined in Section 1.5.

“Prior FY Excess Cash Flow” has the meaning given such term in the definition of
“Funds Available for Specified Investments”.

“Quarterly Payment Date” means the last day of March, June, September and
December, or, if any such day is not a Business Day, the next succeeding
Business Day.

“Redeemable Capital Securities” means Capital Securities of the Parent or any of
its Subsidiaries that, either by its terms, by the terms of any security into
which it is convertible or exchangeable or otherwise, (i) is or upon the
happening of an event or passage of time would be required to be redeemed (for
consideration other than shares of common stock of the Parent) on or prior to
the one-year anniversary of the Stated Maturity Date (as such date may be
extended or otherwise amended from time to time), except to the extent such
mandatory redemption is

 

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required pursuant to a customary change of control provision which expressly
provides that all indebtedness that may be required to be redeemed or prepaid on
account of the relevant change of control shall have been redeemed or prepaid
prior to any such redemption of Capital Securities, (ii) is redeemable at the
option of the holder thereof (for consideration other than shares of common
stock of the Parent) at any time prior to such date or (iii) is convertible into
or exchangeable for debt securities of the Parent or any of its Subsidiaries at
any time prior to such anniversary.

“Refinancing” means, as to any Indebtedness, the incurrence of other
Indebtedness to refinance such existing Indebtedness; provided that, in the case
of such other Indebtedness, the following conditions are satisfied:

(i) the weighted average life to maturity of such refinancing Indebtedness shall
be greater than or equal to the weighted average life to maturity of the
Indebtedness being refinanced, and the first scheduled principal payment in
respect of such refinancing Indebtedness shall not be earlier than the first
scheduled principal payment in respect of the Indebtedness being refinanced;

(ii) the principal amount of such refinancing Indebtedness shall be less than or
equal to the principal amount then outstanding of the Indebtedness being
refinanced;

(iii) the respective obligor or obligors shall be the same on the refinancing
Indebtedness as on the Indebtedness being refinanced;

(iv) the security, if any, for the refinancing Indebtedness shall be the same as
that for the Indebtedness being refinanced (except to the extent that less
security is granted to holders of refinancing Indebtedness);

(v) the refinancing Indebtedness is subordinated to the Obligations to the same
degree, if any, or to a greater degree as the Indebtedness being refinanced; and

(vi) no material terms applicable to such refinancing Indebtedness or, if
applicable, the related guarantees of such refinancing Indebtedness (including
covenants, events of default, remedies, and acceleration rights) shall be more
favorable to the refinancing lenders than the terms that are applicable under
the instruments and documents governing the Indebtedness being refinanced.

“Register” is defined in clause (a) of Section 2.7.

“Release” means a “release”, as such term is defined in CERCLA.

“Replacement Lender” is defined in clause (h) of Section 10.11.

“Required Lenders” means (a) at any time the number of Lenders under this
Agreement does not exceed two (2), Lenders holding 100% of the Total Exposure
Amount and (b) at all other times, Lenders holding more than 66 2/3% of the
Total Exposure Amount; provided that the portion of the Total Exposure Amount
held or deemed held by any Defaulting Lender shall be excluded for purposes of
making a determination of Required Lenders.

 

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“Restricted Payment” means (i) (x) the declaration or payment of any dividend
(other than any dividends payable in common stock of the Parent) on, or on
account of, any class of Capital Securities of the Parent or any Subsidiary or
(y) the making of any payment or distribution on account of, or setting apart
assets for a sinking or other analogous fund for, the purchase, redemption,
defeasance, retirement or other acquisition of any class of Capital Securities
of the Parent or any Subsidiary or any warrants, options or other right or
obligation to purchase or acquire any such Capital Securities, whether now or
hereafter outstanding, or the making of any other distribution in respect
thereof, either directly or indirectly, whether in cash, obligations of the
Parent or any Subsidiary, property or otherwise or (ii) (x) any payment or other
distribution by any Borrower under the Greens Creek Demand Note whether in cash,
property or otherwise or (y) setting apart assets for any such purpose.

“S&P” means Standard & Poor’s Rating Services, a division of The McGraw-Hill
Company, Inc.

“San Juan Silver Mining Joint Venture” means the joint venture entered into
pursuant to that certain Exploration, Development and Mine Operating Agreement
dated February 21, 2008, among Rio Grande Silver, Inc., a Subsidiary, Emerald
Mining & Leasing, LLC and Golden 8 Mining, LLC, regarding the exploration,
evaluation and possible development and mining of mineral resources on certain
properties located in Mineral County, Colorado, as amended to date.

“Sarbanes-Oxley” means the U.S. Sarbanes-Oxley Act of 2002.

“Scotiabank” is defined in the preamble.

“SEC” means the Securities and Exchange Commission.

“Secured Parties” means, collectively, the Lenders, the Administrative Agent,
each counterparty to a Lender Hedging Agreement, each of the foregoing and
Affiliate thereof that is a counterparty to each other agreement which evidences
an Obligation or under which an Obligation arises and each of their respective
successors, transferees and assigns.

“Security Agreement” means the Third Amended and Restated Security Agreement
executed and delivered by an Authorized Officer of each Borrower, Hecla
Admiralty and the Administrative Agent, substantially in the form of Exhibit H
hereto, as amended, supplemented, amended and restated or otherwise modified
from time to time.

“Series B Preferred Stock” means the Parent’s Series B Cumulative Convertible
Preferred Stock, par value $0.25 per share.

“Small Lot Repurchase Program” means the Parent’s program to redeem, purchase or
acquire the common stock, par value $0.25 per share, of the Parent held by
Persons which hold 10 shares or less of such common stock of the Parent.

 

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“Solvent” means, with respect to any Person on a particular date, that on such
date (a) the fair value of the property of such Person on a consolidated basis
is greater than the total amount of liabilities, including contingent
liabilities, of such Person, (b) the present fair salable value of the assets of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond the ability of such Person to pay as such
debts and liabilities mature, and (d) such Person is not engaged in business or
a transaction, and such Person is not about to engage in business or
transaction, for which the property of such Person on a consolidated basis would
constitute an unreasonably small capital. The amount of Contingent Liabilities
at any time shall be computed as the amount that, in light of all the facts and
circumstances existing at such time, can reasonably be expected to become an
actual or matured liability.

“Specified Investments” means Investments permitted under clause (d), (f)(i),
(h), (i), and (l) of Section 7.2.5. Notwithstanding anything contained in the
foregoing to the contrary, the following Investments will not be deemed
“Specified Investments”: (x) Capital Expenditures with respect to the San Juan
Silver Mining Joint Venture (in an aggregate amount of up to $12,000,000), the
Greens Creek Mine or the Lucky Friday Mine and (y) Investments made by or in the
Parent or any of its Subsidiaries to fund expenses or Capital Expenditures of
the Parent or its Subsidiaries, as the case may be.

“Stated Maturity Date” means, with respect to all Loans, October 14, 2012.

“Subordinated Debt” means unsecured Indebtedness which (a) is subordinated in
right of payment to the Obligations on terms reasonably satisfactory to the
Required Lenders, (b) does not require any scheduled repayment within one year
following the Stated Maturity Date, (c) has only cross acceleration rights (and
not cross default rights), (d) is subject to a customary standstill period with
respect to enforcement of remedies and other lender rights of no less than 180
days, (e) is not subject to maintenance financial covenant requirements, (f) is
subject to terms and provisions no more restrictive than those set forth in this
Agreement and the other Loan Documents and (g) has other covenants, events of
default, remedies, acceleration rights, redemption provisions and other terms
that are reasonably satisfactory to the Required Lenders and that are set forth
in Subordinated Debt Documents.

“Subordinated Debt Documents” means, collectively, the loan agreements,
indentures, note purchase agreements, promissory notes, guarantees, and other
instruments and agreements evidencing the terms of Subordinated Debt, as
amended, supplemented, amended and restated or otherwise modified in accordance
with Section 7.2.11.

“Subsidiary” means, with respect to any Person, any other Person of which more
than 50% of the outstanding Voting Securities of such other Person (irrespective
of whether at the time Capital Securities of any other class or classes of such
other Person shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned or controlled by such
Person, by such Person and one or more other Subsidiaries of such Person, or by
one or more other Subsidiaries of such Person. Unless the context otherwise
specifically requires, the term “Subsidiary” shall be a reference to a
Subsidiary of the Parent.

 

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“Subsidiary Guarantors” means the Material U.S. Subsidiaries and the Pledged
Foreign Subsidiaries of the Parent that have executed and delivered to the
Administrative Agent the Subsidiary Guaranty, including by means of a delivery
of a supplement thereto in accordance with Section 7.1.8.

“Subsidiary Guaranty” means the Amended and Restated Subsidiary Guaranty
executed and delivered by an Authorized Officer of each Subsidiary Guarantor,
substantially in the form of Exhibit F hereto, as amended, supplemented, amended
and restated or otherwise modified from time to time.

“Synthetic Lease” means, as applied to any Person, any lease (including leases
that may be terminated by the lessee at any time) of any property (whether real,
personal or mixed) (a) that is not a capital lease in accordance with GAAP and
(b) in respect of which the lessee retains or obtains ownership of the property
so leased for federal income tax purposes, other than any such lease under which
that Person is the lessor.

“Tangible Net Worth” means, as at any date, the excess of

(a) the sum of capital stock (other than Redeemable Capital Securities) taken at
par value, capital surplus (other than in respect of Redeemable Capital
Securities) and retained earnings (or accumulated deficit) of the Parent at such
date;

minus

(b) treasury stock of the Parent and, to the extent included in the preceding
clause (a), minority interests in Subsidiaries of the Parent at such date;

minus

(c) the book value of goodwill and all other intangible assets of the Parent and
its Subsidiaries.

“Taxes” means all income, stamp or other taxes, duties, levies, imposts,
charges, assessments, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental Authority,
and all interest, penalties or similar liabilities with respect thereto.

“Termination Date” means the date on which all Obligations (other than
contingent indemnification obligations for which no claim has been asserted)
have been paid in full in cash, all Lender Hedging Agreements have been
terminated or have been otherwise provided for on terms reasonably satisfactory
to the parties thereto, and all Commitments shall have terminated.

“Total Debt” means, at any time, the outstanding principal amount of all
Indebtedness of the Parent and its Subsidiaries of the type referred to in
clause (a), clause (b), clause (c), clause (e), clause (f) (other than Earn-out
Obligations (A) that have not been reduced to a fixed amount or (B) to the
extent such obligations may, in accordance with their terms, be satisfied at the
sole option of the obligor thereof at any time regardless of the happening of
any event by the delivery of Capital Securities (other than Redeemable Capital
Securities) of the Parent),

 

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clause (g) and clause (h), in each case of the definition of “Indebtedness”
(exclusive of (i) Indebtedness secured on a first-priority basis by any
restricted cash deposit in an amount not exceeding the amount of such restricted
cash deposit and (ii) to the extent constituting Indebtedness, Designated
Preferred Stock and any Contingent Liability (including for the benefit of third
parties) in respect of any of the foregoing.

“Total Exposure Amount” means, on any date of determination (and without
duplication), the outstanding principal amount of all Loans and the unfunded
amount of the aggregate Commitments of the Lenders.

“Transferee” is defined in Section 10.21.

“type” means, relative to the Loans, the portion thereof, if any, being
maintained as a Base Rate Loan or a LIBO Rate Loan.

“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of New York; provided, however, that, if, relative to any Filing Statement
or by reason of any Applicable Law, the perfection or the effect of perfection
or non-perfection of the security interests granted to the Administrative Agent
pursuant to the applicable Loan Document is governed by the Uniform Commercial
Code as in effect in a jurisdiction of the United States other than New York,
then “UCC” means the Uniform Commercial Code as in effect from time to time in
such other jurisdiction for purposes of the provisions of each Loan Document and
any Filing Statement relating to such perfection or effect of perfection or
non-perfection.

“United States” or “U.S.” means the United States of America, its fifty states
and the District of Columbia.

“U.S. Subsidiary” means any Subsidiary that is incorporated or organized under
the laws of the United States, a state thereof or the District of Columbia.

“Voting Securities” means, with respect to any Person, Capital Securities of any
class or kind ordinarily having the power to vote for the election of directors,
managers or other voting members of the governing body of such Person.

“Welfare Plan” means a “welfare plan”, as such term is defined in Section 3(1)
of ERISA.

“wholly-owned Subsidiary” means any Subsidiary all of the outstanding Capital
Securities of which (other than any director’s qualifying shares or investments
by foreign nationals mandated by Applicable Laws) is owned directly or
indirectly by the Parent.

SECTION 1.2. Use of Defined Terms. Unless otherwise defined or the context
otherwise requires, terms for which meanings are provided in this Agreement
shall have such meanings when used in each other Loan Document and the
Disclosure Schedule.

SECTION 1.3. Certain Interpretive Matters. Unless otherwise specified herein or
the context otherwise requires, with reference to their usage in this Agreement
and each other Loan Document:

(a) The meanings of defined terms are equally applicable to the singular and
plural forms thereof.

 

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(b) The following non-capitalized terms (whether or not italicized) have the
following meanings:

“document” includes any and all instruments, documents, agreements,
certificates, notices, reports, financial statements and other writings, however
evidenced, whether in physical or electronic form.

when computing periods of time from a specified date to a later specified date,
(x) “from” means “from and including”, (y) “to” and “until” each mean “to but
excluding” and (z) “through” means “to and including”.

“herein”, “hereto”, “hereof” and “hereunder” and words of similar import when
used in any Loan Document shall refer to such Loan Document as a whole and not
to any particular provision thereof.

“including” is by way of example and not limitation.

“or” is not exclusive.

(c) References to Organic Documents, agreements (including the Loan Documents)
and other contractual instruments shall be deemed to include all subsequent
amendments, restatements, extensions, supplements and other modifications
thereto, but only to the extent that such amendments, restatements, extensions,
supplements and other modifications are permitted by any Loan Document.

(d) References to any Applicable Law shall include all statutory and regulatory
provisions consolidating, amending, replacing, supplementing or interpreting
such Applicable Law.

SECTION 1.4. Cross-References. Unless otherwise specified, (x) references in the
Agreement and any other Loan Document to any recital, definition, Article,
Section or Exhibit are references to such recital, definition, Article or
Section of or Exhibit to the Agreement or such other Loan Document, as the case
may be, and (y) references in any recital, definition or Section of the
Agreement or any other Loan Document to any item or clause are references to
such item or clause of such recital, definition or Section of the Agreement or
such other Loan Document.

SECTION 1.5. Accounting and Financial Determinations.

(a) Unless otherwise specified, all accounting terms used in each Loan Document
shall be interpreted, and all accounting determinations and computations
thereunder (including under Section 7.2.4 and the definitions used in such
calculations) shall be made, in accordance with those U.S. generally accepted
accounting principles (“GAAP”) applied in the preparation of the financial
statements most recently delivered under Section 7.1.1(b) of the Existing Credit
Agreement. Unless otherwise expressly provided, all financial covenants and
defined financial terms shall be computed on a consolidated basis for the Parent
and its Subsidiaries, in each case without duplication.

 

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(b) If the Parent notifies the Administrative Agent that the Parent wishes to
amend any covenant in Article VII or any related definition to eliminate the
effect of any change in GAAP occurring after the date of this Agreement on the
operation of such covenant (or if the Administrative Agent notifies the Parent
that the Required Lenders wish to amend Article VII or any related definition
for such purpose), then the Parent’s compliance with such covenant shall be
determined on the basis of GAAP in effect immediately before the relevant change
in GAAP became effective, until either such notice is withdrawn or such covenant
is amended in a manner satisfactory to the Parent and the Required Lenders. In
the event of any such notification from the Parent or the Administrative Agent
and until such notice is withdrawn or such covenant is so amended, the Parent
will furnish to each Lender and the Administrative Agent, in addition to the
financial statements required to be furnished pursuant to Section 7.1.1 (the
“Current GAAP Financials”), (i) the financial statements described in such
Section based upon GAAP as in effect at the time such covenant was agreed to
(the “Prior GAAP Financials”) and (ii) a reconciliation between the Prior GAAP
Financials and the Current GAAP Financials.

ARTICLE II

COMMITMENTS AND BORROWING AND NOTES

SECTION 2.1. Continuation of Loans. Pursuant to the terms and conditions of the
Existing Credit Agreement, each lender thereunder that had a term loan
commitment thereunder made a loan to Parent equal to such Lender’s pro rata
share of such term loan commitment, or assumed such loans by assignment from the
lenders who made such loans (collectively, all such loans outstanding
immediately prior to the Effective Date for all such lenders are herein referred
to as the “Existing Term Loan”). Existing Term Loans in an aggregate principal
amount equal to $38,337,465.11 remain outstanding under the Existing Credit
Agreement immediately prior to the Effective Date. The Lenders, the Parent and
the Borrowers agree that the Existing Term Loan will continue under this
Agreement on and after the Effective Date as, and be deemed to convert into, a
“Loan” (as defined below) in accordance with the terms of this Agreement and be
part of the Lenders’ total Commitment. The Lenders hereby commit and agree to
make on any Business Day occurring from and after the Effective Date and until
the Commitment Termination Date upon each request by the Borrowers one or more
loans (collectively, the “Loans”) to the Borrowers on the terms and subject to
the conditions hereof, including, without limitation, converting the Existing
Term Loan into an outstanding Loan on the Effective Date, so long as the
outstanding principal amount of all Loans do not exceed the Commitment Amount
then in effect. All Loans shall be the joint and several obligation of the
Borrowers, the Parent and the Subsidiary Guarantors. On the terms and subject to
the conditions hereof on any Business Day occurring from and after the Effective
Date and until the Commitment Termination Date, (x) the Borrowers may from time
to time borrow, prepay and reborrow Loans plus any other amounts available under
the Commitment (relative to each Lender in an amount equal to its Percentage
thereof) and (y) each Lender severally agrees to advance such Loans from time to
time equal to such Lender’s Percentage of the aggregate amount of each Borrowing
requested by the Borrowers to be made on such day. No Lender shall be permitted
or required to make any Loan if, after giving effect thereto, the aggregate
outstanding principal amount of all Loans of such Lender would exceed such
Lender’s Percentage of the then existing Commitment Amount.

 

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SECTION 2.2. Reduction of the Commitment Amounts.

(a) The Borrowers may, from time to time on any Business Day occurring after the
Effective Date, voluntarily reduce the Commitment Amount on the Business Day so
specified by such Borrower; provided that, all such reductions shall require at
least one Business Day’s prior notice to the Administrative Agent and be
permanent, and any partial reduction of any Commitment Amount shall be in a
minimum amount of $1,000,000 and in an integral multiple of $500,000.

(b) Unless otherwise agreed to by the Required Lenders, the Commitment Amount
shall, without any further action, automatically and permanently be reduced on
any date a mandatory repayment is made in accordance with Section 3.1.1, by the
amount such mandatory repayment exceeds $10,000,000.

SECTION 2.3. Borrowing Procedure. By delivering a Borrowing Request to the
Administrative Agent on or before 12:00 p.m. on a Business Day, the Borrowers
may from time to time irrevocably request, on that same Business Day in the case
of Base Rate Loans, or three Business Days’ notice in the case of LIBO Rate
Loans, and in either case not more than five Business Days’ notice, that a
Borrowing be made, (x) in the case of LIBO Rate Loans, in a minimum amount of
$1,000,000 and an integral multiple of $500,000, (y) in the case of Base Rate
Loans, in a minimum amount of $1,000,000 and an integral multiple of $500,000 or
(z) in either case, in the unused amount of the applicable Commitment; provided,
however, that all of the Loans made on the Effective Date shall be made as Base
Rate Loans. On the terms and subject to the conditions of this Agreement, each
Borrowing shall be comprised of the type of Loans, and shall be made on the
Business Day, specified in such Borrowing Request. On or before 1:00 p.m. on
such Business Day, each Lender that has a Commitment to make the Loans being
requested shall deposit with the Administrative Agent same day funds in an
amount equal to such Lender’s Percentage of the requested Borrowing. Such
deposit will be made to an account which the Administrative Agent shall specify
from time to time by notice to the Lenders. To the extent funds are received
from the Lenders, the Administrative Agent shall make such funds available to
the Borrowers by wire transfer to the accounts the Borrowers shall have
specified in its Borrowing Request. No Lender’s obligation to make any Loan
shall be affected by any other Lender’s failure to make any Loan.

SECTION 2.4. Use of Proceeds. The Borrowers will not apply the proceeds of a
Credit Extension for any purpose other than for the general corporate purposes
of the Borrowers, the Parent and any of the Parent’s Subsidiaries to the extent
not prohibited hereunder or at law, including exploration costs, costs of
Permitted Acquisitions, and fees and expenses related thereto and this
Agreement.

SECTION 2.5. Continuation and Conversion Elections. By delivering a
Continuation/ Conversion Notice to the Administrative Agent on or before 10:00
a.m. on a Business Day, the Borrowers may from time to time irrevocably elect,
on not less than one Business Day’s notice in the case of Base Rate Loans, or
three Business Days’ notice in the case of LIBO Rate Loans,

 

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and in either case not more than five Business Days’ notice, that all, or any
portion in an aggregate minimum amount of $1,000,000 and an integral multiple of
$500,000 be, in the case of Base Rate Loans, converted into LIBO Rate Loans or
be, in the case of LIBO Rate Loans, converted into Base Rate Loans or continued
as LIBO Rate Loans (in the absence of delivery of a Continuation/Conversion
Notice relative to any LIBO Rate Loan at least three Business Days (but not more
than five Business Days) before the last day of the then current Interest Period
with respect thereto, such LIBO Rate Loan shall, on such last day, automatically
convert to a Base Rate Loan); provided, however that, (x) each such conversion
or continuation shall be pro rated among the applicable outstanding Loans of all
Lenders that have made such Loans, and (y) no portion of the outstanding
principal amount of any Loans may be continued as, or be converted into, LIBO
Rate Loans when any Default has occurred and is continuing.

SECTION 2.6. Funding. Each Lender may, if it so elects, fulfill its obligation
to make, continue or convert LIBO Rate Loans hereunder by causing one of its
foreign branches or Affiliates (or an international banking facility created by
such Lender) to make or maintain such LIBO Rate Loan; provided, however that
such LIBO Rate Loan shall nonetheless be deemed to have been made and to be held
by such Lender, and the obligation of the Borrowers to repay such LIBO Rate Loan
shall nevertheless be to such Lender for the account of such foreign branch,
Affiliate or international banking facility. In addition, the Borrowers hereby
consent and agree that, for purposes of any determination to be made for
purposes of Sections 4.1, 4.2, 4.3 and 4.4, it shall be conclusively assumed
that each Lender elected to fund all LIBO Rate Loans by purchasing Dollar
deposits in its LIBOR Office’s interbank eurodollar market.

SECTION 2.7. Register; Notes. The Register shall be maintained on the following
terms.

(a) The Borrowers hereby designate the Administrative Agent to serve as the
Borrowers’ agent, solely for the purpose of this clause, to maintain a register
(the “Register”) on which the Administrative Agent will record each Lender’s
Commitment, the Loans made by each Lender and each repayment in respect of the
principal amount of the Loans, annexed to which the Administrative Agent shall
retain a copy of each Lender Assignment Agreement delivered to the
Administrative Agent pursuant to Section 10.11. Failure to make any recordation,
or any error in such recordation, shall not affect any Obligor’s Obligations.
The entries in the Register shall be conclusive, in the absence of manifest
error, and the Borrowers, the Administrative Agent and the Lenders shall treat
each Person in whose name a Loan is registered (or, if applicable, to which a
Note has been issued) as the owner thereof for the purposes of all Loan
Documents, notwithstanding notice or any provision herein to the contrary. Any
assignment or transfer of a Commitment or the Loans made pursuant hereto shall
be registered in the Register only upon delivery to the Administrative Agent of
a Lender Assignment Agreement that has been executed by the requisite parties
pursuant to Section 10.11. No assignment or transfer of a Lender’s Commitment or
Loans shall be effective unless such assignment or transfer shall have been
recorded in the Register by the Administrative Agent as provided in this
Section.

(b) The Borrowers agree that, upon the request to the Administrative Agent by
any Lender, the Borrowers will execute and deliver to such Lender a Note
evidencing the Loans made by, and payable to the order of, such Lender in a
maximum principal amount equal to such Lender’s Percentage of the original
applicable Commitment Amount. The Borrowers hereby

 

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irrevocably authorize each Lender to make (or cause to be made) appropriate
notations on the grid attached to such Lender’s Note (or on any continuation of
such grid), which notations, if made, shall evidence, inter alia, the date of,
the outstanding principal amount of, and the interest rate and Interest Period
applicable to the Loans evidenced thereby. Such notations shall, to the extent
not inconsistent with notations made by the Administrative Agent in the
Register, be conclusive and binding on each Obligor absent manifest error;
provided, that, the failure of any Lender to make any such notations shall not
limit or otherwise affect any Obligations of any Obligor.

ARTICLE III

REPAYMENTS, PREPAYMENTS, INTEREST AND FEES

SECTION 3.1. Repayments and Prepayments; Application. The Borrowers agree that
the Loans shall be repaid and prepaid pursuant to the following terms.

SECTION 3.1.1. Repayments and Prepayments. The Borrowers shall repay in full the
unpaid principal amount of the Loans on the Stated Maturity Date. Prior thereto,
payments and prepayments of the Loans shall or may be made as set forth below.

(a) From time to time on any Business Day, the Borrowers may make a voluntary
prepayment, in whole or in part, of the outstanding principal amount of any
Loans; provided that, all such voluntary prepayments shall require at least one
but no more than five Business Days’ prior notice to the Administrative Agent
(other than any prepayment made on the Effective Date, which may be made without
prior notice); and (C) all such voluntary partial prepayments shall be, in the
case of LIBO Rate Loans, in an aggregate minimum amount of $1,000,000 and an
integral multiple of $1,000,000 and, in the case of Base Rate Loans, in an
aggregate minimum amount of $500,000 and an integral multiple of $100,000.

(b) Immediately upon any acceleration of the Stated Maturity Date of the Loans
pursuant to Section 8.2 or Section 8.3, the Borrowers shall repay all the Loans,
unless, pursuant to Section 8.3, only a portion of all the Loans is so
accelerated (in which case the portion so accelerated shall be so repaid).

(c) Within five Business Days after receipt by the Parent or any Subsidiary of
any Net Casualty Proceeds, the Borrowers shall, to the extent the aggregate
amount of such proceeds received by the Parent and its Subsidiaries in any
period of twelve consecutive calendar months since the Effective Date exceeds
$10,000,000, make a mandatory prepayment of the Loans in an amount equal to 100%
of such Net Casualty Proceeds; provided, however, that, upon written notice by
the Borrowers to the Administrative Agent not more than five Business Days
following receipt by Parent and its Subsidiaries of any such Net Casualty
Proceeds (so long as no Default has occurred and is continuing), such proceeds
may be retained by the Parent and its Subsidiaries (and be excluded from the
prepayment requirements of this clause) if (w) the Borrowers inform the
Administrative Agent in such notice of the appropriate Person’s good faith
intention to apply such Net Casualty Proceeds to the acquisition of other assets
or properties consistent with the businesses permitted to be conducted pursuant
to Section 7.2.1 (including by way of merger or Investment), (x) within 180 days
following the receipt of such Net Casualty Proceeds, such proceeds are applied
or committed to such acquisition, (y) if the property subject to the Casualty

 

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Event that generated such Net Casualty Proceeds was collateral under the
Security Agreement, then, all property acquired with such Net Casualty Proceeds
shall be subject to the Lien of the applicable Loan Documents and (z) if the
property subject to the Casualty Event that generated such Net Casualty Proceeds
was owned by an Obligor or a U.S. Subsidiary, then, all property acquired with
such Net Casualty Proceeds shall be acquired by an Obligor or such U.S.
Subsidiary, as applicable. The amount of such Net Disposition Proceeds or Net
Casualty Proceeds unused or uncommitted after such 180 day period shall be
applied to prepay the Loans.

Each prepayment of any Loans made pursuant to this Section shall be without
premium or penalty, except as may be required by Section 4.4.

SECTION 3.1.2. Application. Each prepayment or repayment of the principal of the
Loans shall be applied, to the extent of such prepayment or repayment, first, to
the principal amount thereof being maintained as Base Rate Loans, and second, to
the principal amount thereof being maintained as LIBO Rate Loans.

SECTION 3.2. Interest Provisions. Interest on the outstanding principal amount
of the Loans shall accrue and be payable in accordance with the terms set forth
below.

SECTION 3.2.1. Rates. Pursuant to an appropriately delivered Borrowing Request
or Continuation/Conversion Notice, the Borrowers may elect that the Loans
comprising a Borrowing accrue interest at a rate per annum:

(a) on that portion maintained from time to time as a Base Rate Loan, equal to
the sum of the Alternate Base Rate from time to time in effect plus the
Applicable Margin; and

(b) on that portion maintained as a LIBO Rate Loan, during each Interest Period
applicable thereto, equal to the sum of the LIBO Rate (Reserve Adjusted) for
such Interest Period plus the Applicable Margin.

All LIBO Rate Loans shall bear interest from and including the first day of the
applicable Interest Period to (but not including) the last day of such Interest
Period at the interest rate determined as applicable to such LIBO Rate Loan.

SECTION 3.2.2. Default Rates. Upon the occurrence and during the continuation of
(x) any Event of Default described in Section 8.1.1 or 8.1.9 or (y) if requested
by the Required Lenders, any other Event of Default, the outstanding principal
amount of the Loans and, to the extent permitted by Applicable Law, any interest
payments thereon not paid when due and any fees and other amounts then due and
payable hereunder, shall thereafter bear interest (including post-petition
interest in any proceeding described in Section 8.1.9) payable upon demand at a
rate that is (i) in the case of Loans, 2.0% per annum in excess of the interest
rate otherwise payable under this Agreement with respect to such Loans and
(ii) in the case of other Obligations, 2.0% per annum in excess of the interest
rate otherwise payable under this Agreement with respect to Base Rate Loans;
provided that, in the case of LIBO Rate Loans, upon the expiration of the
Interest Period in effect at the time any such increase in interest rate is
effective, such LIBO Rate Loans shall thereupon become Base Rate Loans and shall
thereafter bear interest payable upon demand at a rate equal to 2.0% per annum
in excess of the interest rates otherwise payable under this Agreement with
respect to Base Rate Loans.

 

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SECTION 3.2.3. Payment Dates. Interest accrued on the Loans shall be payable,
without duplication:

(a) on the Stated Maturity Date;

(b) on the date of any payment or prepayment, in whole or in part, of principal
outstanding on such Loans on the principal amount so paid or prepaid;

(c) relative to Base Rate Loans, on each Quarterly Payment Date occurring after
the Effective Date;

(d) relative to LIBO Rate Loans, on the last day of each applicable Interest
Period (and, if such Interest Period shall exceed three months, on the date
occurring on each three-month interval occurring after the first day of such
Interest Period);

(e) relative to any Base Rate Loans converted into LIBO Rate Loans on a day when
interest would not otherwise have been payable pursuant to clause (c), on the
date of such conversion; and

(f) on that portion of any Loans the Stated Maturity Date of which is
accelerated pursuant to Section 8.2 or 8.3, immediately upon such acceleration.

Interest accrued on Loans or other monetary Obligations after the date such
amount is due and payable (whether on the Stated Maturity Date, upon
acceleration or otherwise) shall be payable upon demand.

SECTION 3.3. Fees. The Parent and the Borrowers agree to pay various fees in
accordance with Sections 3.3.1 and 3.3.2, all of which fees shall be
non-refundable.

SECTION 3.3.1. Fee Letters Amounts. The Borrowers and the Parent agree to pay
the fees set forth in the Fee Letters on the dates set forth in the Fee Letters.

SECTION 3.3.2. Commitment Fee. The Borrowers agree to pay a commitment fee to
the Administrative Agent for the account of each Lender, for the period
(including any portion thereof when any of its Commitments are suspended by
reason of the Borrowers’ inability to satisfy any condition of Article V)
commencing on the Effective Date and continuing through the Commitment
Termination Date, in an amount equal to 2.40% of the average daily unused
portion of the Commitment Amount. All commitment fees shall be payable pursuant
to this Section shall be calculated on a year comprised of 360 days and shall be
payable by the Borrowers in arrears on each Quarterly Payment Date, commencing
with the first Quarterly Payment Date following the Effective Date, and on the
Commitment Termination Date.

ARTICLE IV

CERTAIN LIBO RATE AND OTHER PROVISIONS

SECTION 4.1. LIBO Rate Lending Unlawful. If any Lender shall determine (which
determination shall, upon notice to the Borrowers and the Administrative Agent,
be conclusive and binding on the Borrowers) that the introduction of or any
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any Applicable Law makes it unlawful, or any Governmental Authority asserts that
it is unlawful, for such Lender to make or continue any Loans as, or to convert
any Loans into, a LIBO Rate Loan, the obligations of such Lender to make,
continue or convert any such LIBO Rate Loan shall, upon such determination,
forthwith be suspended until such Lender shall notify the Administrative Agent
that the circumstances causing such suspension no longer exist, and all
outstanding LIBO Rate Loans payable to such Lender shall automatically convert
into Base Rate Loans at the end of the then current Interest Periods with
respect thereto or sooner, if required by such Applicable Law or assertion.

SECTION 4.2. Deposits Unavailable. If the Administrative Agent shall have
determined that (i) Dollar deposits in the relevant amount and for the relevant
Interest Period are not available to it in its relevant market or (ii) by reason
of circumstances affecting its relevant market, adequate means do not exist for
ascertaining the interest rate applicable hereunder to LIBO Rate Loans; then,
upon notice from the Administrative Agent to the Borrowers and the Lenders, the
obligations of all Lenders under Section 2.3 and Section 2.5 to make or continue
any Loans as, or to convert any Loans into, LIBO Rate Loans shall forthwith be
suspended until the Administrative Agent shall notify the Borrowers and the
Lenders that the circumstances causing such suspension no longer exist.

SECTION 4.3. Increased LIBO Rate Loan Costs, etc. The Borrowers agree to
reimburse each Lender for any increase in the cost to such Lender of, or any
reduction in the amount of any sum receivable by such Secured Party in respect
of, such Secured Party’s Commitments and the making of Credit Extensions
hereunder (including the making, continuing or maintaining (or of its obligation
to make or continue) any Loans as, or of converting (or of its obligation to
convert) any Loans into, LIBO Rate Loans) that arise in connection with any
change in, or the introduction, adoption, effectiveness, interpretation,
reinterpretation or phase-in after the Effective Date of, any Applicable Law or
request (whether or not having the force of law) of any Governmental Authority,
except for such changes relative to increased capital costs and Taxes which are
governed by Sections 4.5 and 4.6, respectively. Each affected Secured Party
shall promptly notify the Administrative Agent and the Borrowers in writing of
the occurrence of any such event, stating the reasons therefor and the
additional amount required fully to compensate such Secured Party for such
increased cost or reduced amount. Such additional amounts shall be payable by
the Borrowers directly to such Secured Party within five days of its receipt of
such notice, and such notice shall, in the absence of manifest error, be
conclusive and binding on the Borrowers.

SECTION 4.4. Funding Losses. In the event any Lender shall incur any loss or
expense (including any loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to make or
continue any portion of the principal amount of any Loans as, or to convert any
portion of the principal amount of any Loans into, a LIBO Rate Loan) as a result
of

(a) any conversion or repayment or prepayment of the principal amount of any
LIBO Rate Loan on a date other than the scheduled last day of the Interest
Period applicable thereto, whether pursuant to Article III or otherwise;

 

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(b) any Loans not being made as LIBO Rate Loans in accordance with the Borrowing
Request therefor; or

(c) any Loans not being continued as, or converted into, LIBO Rate Loans in
accordance with the Continuation/Conversion Notice therefor;

then, upon the written notice of such Lender to the Borrowers (with a copy to
the Administrative Agent), the Borrowers shall, within five days of its receipt
thereof, pay directly to such Lender such amount as will (in the reasonable
determination of such Lender) reimburse such Lender for such loss or expense.
Such written notice shall, in the absence of manifest error, be conclusive and
binding on the Borrowers.

SECTION 4.5. Increased Capital Costs. If any change in, or the introduction,
adoption, effectiveness, interpretation, reinterpretation or phase-in of, any
Applicable Law or request (whether or not having the force of law) of any
Governmental Authority affects or would affect the amount of capital required or
expected to be maintained by any Secured Party or any Person controlling such
Secured Party, and such Secured Party determines (in good faith but in its sole
and absolute discretion) that the rate of return on its or such controlling
Person’s capital as a consequence of the Commitments or the Credit Extensions
made, by such Secured Party is reduced to a level below that which such Secured
Party or such controlling Person could have achieved but for the occurrence of
any such circumstance, then upon notice from time to time by such Secured Party
to the Borrowers, the Borrowers shall within five days following receipt of such
notice pay directly to such Secured Party additional amounts sufficient to
compensate such Secured Party or such controlling Person for such reduction in
rate of return. A statement of such Secured Party as to any such additional
amount or amounts shall, in the absence of manifest error, be conclusive and
binding on the Borrowers. In determining such amount, such Secured Party may use
any method of averaging and attribution that it (in its sole and absolute
discretion) shall deem applicable.

SECTION 4.6. Taxes. Relative to Taxes, the Borrowers covenant and agree as
follows;

(a) Any and all payments by the Parent, any Borrower or any Subsidiary Guarantor
under each Loan Document shall be made without setoff, counterclaim or other
defense, and free and clear of, and without deduction or withholding for or on
account of, any Taxes. In the event that any Taxes are imposed and required to
be deducted or withheld from any payment required to be made by any Obligor to
or on behalf of any Secured Party under any Loan Document, then:

(i) subject to clause (f), if such Taxes are Non-Excluded Taxes, the amount of
such payment shall be increased as may be necessary so that such payment is
made, after withholding or deduction for or on account of such Taxes, in an
amount that is not less than the amount provided for in such Loan Document; and

(ii) the Borrowers shall withhold the full amount of such Taxes from such
payment (as increased pursuant to clause (a)(i)) and shall pay such amount to
the Governmental Authority imposing such Taxes in accordance with Applicable
Law.

 

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(b) In addition, the Borrowers shall pay all Other Taxes imposed to the relevant
Governmental Authority imposing such Other Taxes in accordance with Applicable
Law.

(c) As promptly as practicable after the payment of any Taxes or Other Taxes,
and in any event within 45 days of any such payment being due, the Borrowers
shall furnish to the Administrative Agent a copy of an official receipt (or a
certified copy thereof) evidencing the payment of such Taxes or Other Taxes. The
Administrative Agent shall make copies thereof available to any Lender upon
request therefor.

(d) Subject to clause (f), the Borrowers shall indemnify each Secured Party for
any Non-Excluded Taxes and Other Taxes levied, imposed or assessed on (and
whether or not paid directly by) such Secured Party whether or not such
Non-Excluded Taxes or Other Taxes are correctly or legally asserted by the
relevant Governmental Authority. Promptly upon having knowledge that any such
Non-Excluded Taxes or Other Taxes have been levied, imposed or assessed, and
promptly upon notice thereof by any Secured Party, the Borrowers shall pay such
Non-Excluded Taxes or Other Taxes directly to the relevant Governmental
Authority (provided that, no Secured Party shall be under any obligation to
provide any such notice to the Borrowers). In addition, the Borrowers shall
indemnify each Secured Party for any incremental Taxes that may become payable
by such Secured Party as a result of any failure of the Borrowers to pay any
Taxes when due to the appropriate Governmental Authority or to deliver to the
Administrative Agent, pursuant to clause (c), documentation evidencing the
payment of Taxes or Other Taxes. With respect to indemnification for
Non-Excluded Taxes and Other Taxes actually paid by any Secured Party or the
indemnification provided in the immediately preceding sentence, such
indemnification shall be made within 30 days after the date such Secured Party
makes written demand therefor. The Borrowers acknowledge that any payment made
to any Secured Party or to any Governmental Authority in respect of the
indemnification obligations of the Borrowers pursuant to this clause shall
constitute a payment in respect of which the provisions of clause (a) and this
clause shall apply. The indemnity provided for herein shall survive the payment
of the Obligations and termination of this Agreement.

(e) Each Non-U.S. Lender, on or prior to the date on which such Non-U.S. Lender
becomes a Lender hereunder (and from time to time thereafter upon the request of
the Borrowers or the Administrative Agent, but only for so long as such Non-U.S.
Lender is legally entitled to do so), shall deliver to the Borrowers and the
Administrative Agent either (i) two duly completed copies of either (x) Internal
Revenue Service Form W-8BEN claiming eligibility of the Non-U.S. Lender for
benefits of an income tax treaty to which the United States is a party or
(y) Internal Revenue Service Form W-8ECI, or in either case an applicable
successor form; or (ii) in the case of a Non-U.S. Lender that is not legally
entitled to deliver either form listed in clause (e)(i), (x) a certificate (an
“Exemption Certificate”) to the effect that such Non-U.S. Lender is not (A) a
“bank” within the meaning of Section 881(c)(3)(A) of the Code, (B) a “10 percent
shareholder” of the Borrowers within the meaning of Section 881(c)(3)(B) of the
Code or (C) a controlled foreign corporation receiving interest from a related
person within the meaning of Section 881(c)(3)(C) of the Code and (y) two duly
completed copies of Internal Revenue Service Form W-8BEN or applicable successor
form.

(f) The Borrowers shall not be obligated to pay any additional amounts to any
Lender pursuant to clause (a)(i), or to indemnify any Lender pursuant to clause
(d), in respect of United

 

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States federal withholding taxes to the extent imposed as a result of (x) the
failure of such Lender to deliver to the Borrowers any form or Exemption
Certificate, as applicable to such Lender, pursuant to clause (e), (y) any such
form or Exemption Certificate not establishing a complete exemption from U.S.
federal withholding tax or the information or certifications made therein by the
Lender being untrue or inaccurate on the date delivered in any material respect
or (z) the Lender designating a successor lending office at which it maintains
its Loans which has the effect of causing such Lender to become obligated for
tax payments in excess of those in effect immediately prior to such designation;
provided, however, that the Borrowers shall be obligated to pay additional
amounts to any such Lender pursuant to clause (a)(i), and to indemnify any such
Lender pursuant to clause (d), in respect of United States federal withholding
taxes if (i) any such failure to deliver a form or forms or an Exemption
Certificate or the failure of such form or forms or Exemption Certificate to
establish a complete exemption from U.S. federal withholding tax or inaccuracy
or untruth contained therein resulted from a change in any applicable statute,
treaty, regulation or other applicable law or any interpretation of any of the
foregoing occurring after the Effective Date, which change rendered such Lender
no longer legally entitled to deliver such form or forms or Exemption
Certificate or otherwise ineligible for a complete exemption from U.S. federal
withholding tax, or rendered the information or certifications made in such form
or forms or Exemption Certificate untrue or inaccurate in a material respect,
(ii) the redesignation of the Lender’s lending office was made at the request of
the Borrowers or (iii) the obligation to pay any additional amounts to any such
Lender pursuant to clause (a)(i) or to indemnify any such Lender pursuant to
clause (d) is with respect to any Person that becomes a Lender as a result of an
assignment made at the request of the Borrowers.

SECTION 4.7. Payments, Computations, Proceeds of Collateral, etc. Relative to
the timing, application and calculation of payments, the Borrowers covenant and
agree as follows:

(a) Unless otherwise expressly provided in a Loan Document, all payments by the
Borrowers pursuant to each Loan Document shall be made by the Borrowers to the
Administrative Agent for the pro rata account of the Secured Parties entitled to
receive such payment. All payments shall be made without setoff, deduction or
counterclaim not later than 11:00 a.m. on the date due in same day or
immediately available funds to such account as the Administrative Agent shall
specify from time to time by notice to the Borrowers. Funds received after that
time shall be deemed to have been received by the Administrative Agent on the
next succeeding Business Day. The Administrative Agent shall promptly remit in
same day funds to each Secured Party its share, if any, of such payments
received by the Administrative Agent for the account of such Secured Party. All
interest (including interest on LIBO Rate Loans) and fees shall be computed on
the basis of the actual number of days (including the first day but excluding
the last day) occurring during the period for which such interest or fee is
payable over a year comprised of 360 days (or, in the case of interest on a Base
Rate Loan (calculated at other than the Federal Funds Rate), 365 days or, if
appropriate, 366 days). Payments due on a day other than a Business Day shall
(except as otherwise required by clause (c) of the definition of “Interest
Period”) be made on the next succeeding Business Day and such extension of time
shall be included in computing interest and fees in connection with that
payment.

(b) All amounts received as a result of the exercise of remedies under the Loan
Documents (including from the proceeds of collateral securing the Obligations)
or under Applicable Law shall be applied upon receipt to the Obligations as
follows: (i) first, to the

 

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payment of all Obligations owing to the Administrative Agent, in its capacity as
the Administrative Agent (including the fees and expenses of counsel to the
Administrative Agent), (ii) second, after payment in full in cash of the amounts
specified in clause (b)(i), to the ratable payment of all interest (including
interest accruing after the commencement of a proceeding in bankruptcy,
insolvency or similar law, whether or not permitted as a claim under such law)
and fees owing under the Loan Documents, and all costs and expenses owing to the
Secured Parties pursuant to the terms of the Loan Documents, until paid in full
in cash, (iii) third, after payment in full in cash of the amounts specified in
clauses (b)(i) and (b)(ii), to the ratable payment of (A) the principal amount
of the Loans then outstanding, (B) credit exposure owing to Secured Parties
under Lender Hedging Agreements and (C) the Obligations referenced in clauses
(x) and (y) of the definition of “Obligations” (set forth in Section 1.1) to the
Secured Parties also referenced therein, (iv) fourth, after payment in full in
cash of the amounts specified in clauses (b)(i) through (b)(iii), to the ratable
payment of all other Obligations owing to the Secured Parties, and (v) fifth,
after payment in full in cash of the amounts specified in clauses (b)(i) through
(b)(iv), and following the Termination Date, to each applicable Obligor or any
other Person lawfully entitled to receive such surplus.

SECTION 4.8. Sharing of Payments. If any Secured Party shall obtain any payment
or other recovery (whether voluntary, involuntary, by application of setoff or
otherwise) on account of any Credit Extension (other than pursuant to Sections
4.3, 4.4, 4.5 or 4.6) in excess of its pro rata share of payments obtained by
all Secured Parties, such Secured Party shall purchase from the other Secured
Parties such participations in Credit Extensions made by them as shall be
necessary to cause such purchasing Secured Party to share the excess payment or
other recovery ratably (to the extent such other Secured Parties were entitled
to receive a portion of such payment or recovery) with each of them; provided,
however, that, if all or any portion of the excess payment or other recovery is
thereafter recovered from such purchasing Secured Party, the purchase shall be
rescinded and each Secured Party which has sold a participation to the
purchasing Secured Party shall repay to the purchasing Secured Party the
purchase price to the ratable extent of such recovery together with an amount
equal to such selling Secured Party’s ratable share (according to the proportion
of (x) the amount of such selling Secured Party’s required repayment to the
purchasing Secured Party to (y) total amount so recovered from the purchasing
Secured Party) of any interest or other amount paid or payable by the purchasing
Secured Party in respect of the total amount so recovered. The Borrowers agree
that any Secured Party purchasing a participation from another Secured Party
pursuant to this Section may, to the fullest extent permitted by Applicable Law,
exercise all its rights of payment (including pursuant to Section 4.9) relative
to such participation as fully as if such Secured Party were the secured, direct
creditor of the Borrowers in the amount of such participation. If under any
applicable bankruptcy, insolvency or other similar law any Secured Party
receives a secured claim in lieu of a setoff to which this Section applies, such
Secured Party shall, to the extent practicable, exercise its rights in respect
of such secured claim in a manner consistent with the rights of the Secured
Parties entitled under this Section to share in the benefits of any recovery on
such secured claim.

SECTION 4.9. Setoff. Each Secured Party shall, upon the occurrence and during
the continuance of any Default described in clauses (a) through (d) of
Section 8.1.9 or, with the consent of the Required Lenders, upon the occurrence
and during the continuance of any other Event of Default, have the right to
appropriate and apply to the payment of the Obligations owing to it (whether or
not then due) (x) any and all balances, credits, deposits, accounts or

 

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moneys of the Borrowers then or thereafter maintained with such Secured Party
(as security for such Obligations), and the Borrowers hereby grant to each
Secured Party a continuing security interest in such balances, credits,
deposits, accounts or moneys and (y) any and all amounts owed to Parent under
any and all Lender Hedging Agreements of Parent; provided, however, that any
such appropriation and application shall be subject to the provisions of
Section 4.8. Each Secured Party agrees promptly to notify the Borrowers and the
Administrative Agent after any such appropriation and application made by such
Secured Party; provided, however, that the failure to give such notice shall not
affect the validity of such setoff and application. The rights of each Secured
Party under this Section are in addition to other rights and remedies (including
other rights of setoff under Applicable Law or otherwise) which such Secured
Party may have.

ARTICLE V

CONDITIONS TO EFFECTIVENESS AND CREDIT EXTENSIONS

SECTION 5.1. Effectiveness. The effectiveness of this Agreement shall be subject
to the prior or concurrent satisfaction of each of the conditions precedent set
forth in this Section 5.1.

SECTION 5.1.1. Credit Agreement. The Administrative Agent shall have received,
with counterparts for each Lender, executed counterparts of this Agreement,
dated as of the date hereof, duly executed and delivered by an Authorized
Officer of the Parent and each Borrower.

SECTION 5.1.2. Resolutions, etc. The Administrative Agent shall have received
from each Obligor, as applicable, (i) a copy of a good standing certificate from
its jurisdiction of organization (and with respect to the Parent, from the
States of Idaho and Alaska), dated a date reasonably close to the Effective
Date, and (ii) a certificate, dated the Effective Date with counterparts for
each Lender, duly executed and delivered by such Person’s Secretary or Assistant
Secretary, managing member or general partner, as applicable, as to

(a) resolutions of each such Person’s Board of Directors then in full force and
effect authorizing the execution, delivery and performance of each Loan Document
to be executed by such Person and the transactions contemplated hereby and
thereby;

(b) the incumbency and signatures of those of its officers, managing member or
general partner, as applicable, authorized to act with respect to each Loan
Document to be executed by such Person; and

(c) the full force and validity of each Organic Document of such Person and
certified copies thereof;

upon which certificates each Secured Party may conclusively rely until it shall
have received a further certificate of the Secretary, Assistant Secretary,
managing member or general partner, as applicable, of any such Person canceling
or amending the prior certificate of such Person.

SECTION 5.1.3. Effective Date Certificate. The Administrative Agent shall have
received the Effective Date Certificate, dated the Effective Date and duly
executed and delivered by an Authorized Officer of the Parent, in which
certificate the Parent shall agree and acknowledge that the statements made
therein shall be deemed to be true and correct

 

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representations and warranties of the Parent as of such date, and, at the time
each such certificate is delivered, such statements shall in fact be true and
correct. All documents and agreements required to be appended to the Effective
Date Certificate shall be in form and substance reasonably satisfactory to the
Administrative Agent, shall have been executed and delivered by the requisite
parties, and shall be in full force and effect.

SECTION 5.1.4. Delivery of Notes. The Administrative Agent shall have received,
for the account of each Lender that has requested a Note, such Lender’s Note
duly executed and delivered by an Authorized Officer of each Borrower.

SECTION 5.1.5. Solvency, etc. The Administrative Agent shall have received, with
counterparts for each Lender, a certificate as to the Solvency of each Obligor,
duly executed and delivered by the chief financial or accounting Authorized
Officer of the Parent, dated as of the Effective Date, in form and substance
satisfactory to the Lenders.

SECTION 5.1.6. Guarantees. The Administrative Agent shall have received, with
counterparts for each Lender, (a) the Subsidiary Guaranty, dated as of the date
hereof, duly executed and delivered by an Authorized Officer of each Subsidiary
Guarantor and (b) the Parent Guaranty, dated as of the date hereof, executed and
delivered by an Authorized Officer of Parent.

SECTION 5.1.7. Pledge Agreement and Security Agreement. The Administrative Agent
shall have received executed counterparts of the Pledge Agreement (duly executed
and delivered by an Authorized Officer of the Parent and each U.S. Subsidiary
holding Capital Securities of a Material U.S. Subsidiary or of a Borrower) and
the Security Agreement (duly executed and delivered by an Authorized Officer of
each of each Borrower and Hecla Admiralty), each dated as of the Effective Date,
together with:

(a) in the case of Capital Securities that are certificated securities (as
defined in the UCC), certificates (to the extent not already held by the
Administrative Agent) evidencing all of the issued and outstanding Capital
Securities of a Material U.S. Subsidiary owned by each Obligor (subject,
however, to the limitations, if any, provided for in Section 7.1.8), which
certificates shall be accompanied by undated instruments of transfer duly
executed in blank, or, if any Capital Securities of a Material U.S. Subsidiary
that are uncertificated securities (as defined in the UCC), confirmation and
evidence satisfactory to the Administrative Agent that the security interest
therein has been transferred to and perfected by the Administrative Agent for
the benefit of the Secured Parties in accordance with Articles 8 and 9 of the
UCC and other Applicable Laws as to the perfection of the pledge of such Capital
Securities;

(b) Filing Statements suitable in form for naming each Borrower, Hecla Admiralty
and each holder of Capital Securities of a Material U.S. Subsidiary or of a
Borrower as a debtor and the Administrative Agent as the secured party, or other
similar instruments or documents to be filed under the UCC of all jurisdictions
as may be necessary or, in the opinion of the Administrative Agent, desirable to
perfect the first priority security interests (including security interests in
respect of Capital Securities that are uncertificated securities (as defined in
the UCC) of the Administrative Agent granted pursuant to the Security Agreement
and the Pledge Agreement, as the case may be;

 

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(c) UCC Form UCC-3 termination statements, if any, necessary to release all
Liens (other than Liens permitted by Section 7.2.3) and other rights of any
Person in any Collateral; and

(d) copies of UCC searches, dated a date reasonably near to the Effective Date,
listing all effective financing statements which name any Obligor (under its
present name and any previous names during the last five years) as the debtor,
together with copies of such financing statements (none of which shall, except
relative to Liens permitted by Section 7.2.3, evidence a Lien on any collateral
described in any Loan Document).

SECTION 5.1.8. Filing Agent, etc. All Uniform Commercial Code financing
statements or other similar financing statements and Uniform Commercial Code
(Form UCC-3) termination statements required pursuant to the Loan Documents
(collectively, the “Filing Statements”) shall have been delivered to Corporation
Service Company or another similar filing service company acceptable to the
Administrative Agent (the “Filing Agent”). The Filing Agent shall have
acknowledged in a writing satisfactory to the Administrative Agent and its
counsel (i) the Filing Agent’s receipt of all Filing Statements, (ii) that the
Filing Statements have either been submitted for filing in the appropriate
filing offices or will be submitted for filing in the appropriate offices within
ten days following the Effective Date and (iii) that the Filing Agent will
notify the Administrative Agent and its counsel of the results of such
submissions within 30 days following the Effective Date.

SECTION 5.1.9. Insurance. The Administrative Agent shall have received,
certificates from one or more insurance companies satisfactory to the Lenders,
evidencing coverage required to be maintained pursuant to each Loan Document.

SECTION 5.1.10. Opinion of Counsel. The Administrative Agent shall have received
an opinion, dated the Effective Date and addressed to the Administrative Agent
and all Lenders, from K&L Gates LLP, counsel to the Obligors, in form and
substance satisfactory to the Lenders.

SECTION 5.1.11. Closing Fees, Expenses, etc. The Administrative Agent shall have
received for its own account, or for the account of each Lender, as the case may
be, all fees, costs and expenses due and payable pursuant to Sections 3.3 and,
if then invoiced, 10.3.

SECTION 5.1.12. PATRIOT Act Disclosures. The Administrative Agent and each
Lender shall have received all PATRIOT Act Disclosures requested by them prior
to execution of this Agreement.

SECTION 5.1.13. Compliance Certificate. The Lenders shall have received an
initial Compliance Certificate on a pro forma basis as if the Credit Extension
had been made as of the last day of the then most recently ended Fiscal Quarter,
dated the date of the initial Credit Extension, duly executed (and with all
schedules thereto duly completed) and delivered by the chief financial or
accounting Authorized Officer of the Parent and showing compliance with the
covenants set forth in Section 7.2.4.

 

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SECTION 5.1.14. Hecla Mine Plan. The Administrative Agent shall have received
the most current Hecla Mine Plan in form and substance reasonably acceptable to
the Administrative Agent.

SECTION 5.1.15. Material Adverse Change. There shall have been no (i) Material
Adverse Change or (ii) any change since December 31, 2008 that has had or could
reasonably be expected to have a material adverse effect on the prospects of the
Parent and its Subsidiaries taken as a whole from the prospects set forth in the
financial statements of the Parent ending December 31, 2008.

SECTION 5.2. All Credit Extensions. The obligation of each Lender to make any
Credit Extension shall be subject to the satisfaction of each of the conditions
precedent set forth below.

SECTION 5.2.1. Compliance with Warranties, No Default, etc. Both before and
after giving effect to the Credit Extension, the following statements shall be
true and correct:

(a) the representations and warranties set forth in each Loan Document shall be
true and correct in all material respects with the same effect as if then made
(unless stated to relate solely to an earlier date, in which case such
representations and warranties shall have been true and correct in all material
respects as of such earlier date), in each case other than representations and
warranties that are subject to a materiality qualifier, in which case such
representations and warranties shall be (or shall have been) true and correct;
and

(b) no Default shall have then occurred and be continuing.

SECTION 5.2.2. Credit Extension Request, etc. The Administrative Agent shall
have received a Borrowing Request. Each of the delivery of a Borrowing Request
and the acceptance by the Borrowers of the proceeds of such Credit Extension
shall constitute a representation and warranty by the Parent and the Borrowers
that on the date of such Credit Extension (both immediately before and after
giving effect to such Credit Extension and the application of the proceeds
thereof) the statements made in Section 5.2.1 are true and correct (unless
stated to relate solely to an earlier date, in which case such representations
and warranties shall be true and correct as of such earlier date).

SECTION 5.2.3. Satisfactory Legal Form. All documents executed or submitted
pursuant hereto by or on behalf of any Obligor shall be reasonably satisfactory
in form and substance to the Administrative Agent and its counsel, and the
Administrative Agent and its counsel shall have received all information,
approvals, opinions, documents or instruments as the Administrative Agent or its
counsel may reasonably request.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

In order to induce the Secured Parties to enter into this Agreement and to make
Credit Extensions hereunder, the Parent and each Borrower represents and
warrants as to itself and its Subsidiaries, if any, to each Secured Party as set
forth in this Article.

 

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SECTION 6.1. Organization, etc. Each Obligor is validly organized and existing
and in good standing under the laws of the state or jurisdiction of its
incorporation or organization, is duly qualified to do business and is in good
standing as a foreign entity in each jurisdiction where the nature of its
business requires such qualification (except to the extent such failure would
not have a material adverse effect on the business of such Obligor) and has full
power and authority and holds all requisite Approvals to enter into and perform
its Obligations under each Loan Document to which it is a party, to own and hold
under lease its property and to conduct its business substantially as currently
conducted by it.

SECTION 6.2. Due Authorization, Non-Contravention, etc. The execution, delivery
and performance by each Obligor of each Loan Document executed or to be executed
by it are in each case within such Person’s powers, have been duly authorized by
all necessary action, and do not:

(a) contravene any Obligor’s Organizational Documents, or any Applicable Law; or

(b) result in or require the creation or imposition of, any Lien on any
Obligor’s properties (except as permitted by this Agreement) or (ii) result in a
breach of, or a default under, any contractual restriction binding on or
affecting any Obligor.

SECTION 6.3. Government Approval, Regulation, etc. Except as set forth on
Schedule 6.3, as of each date the representation and warranty is made no
material Approval or other action by, and no notice to or filing with any
Governmental Authority or other Person (other than those that have been duly
obtained or made and which are in full force and effect) is required for the
Parent or any of its Subsidiaries to continue its operations as conducted as of
such date or the due execution, delivery or performance as of such date by any
Obligor of any Loan Document to which it is a party. Neither the Parent nor any
Subsidiary is an “investment company” within the meaning of the Investment
Company Act of 1940. Neither the Parent nor any Subsidiary (x) is listed on the
“Specially Designated Nationals and Blocked Person List” maintained by the
Office of Foreign Assets Control (“OFAC”), the Department of the Treasury, or
included in any executive orders relating thereto or (y) have used the proceeds
of the Credit Extensions in violation in any material respect of any of the
foreign asset control regulations of OFAC or any Applicable Law.

SECTION 6.4. Validity, etc. Each Loan Document to which any Obligor is a party
constitutes the legal, valid and binding obligations of such Obligor,
enforceable against such Obligor in accordance with their respective terms
(except, in any case, as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or similar laws affecting creditors’
rights generally and by principles of equity). The Liens granted by each Obligor
in favor of the Secured Parties constitutes valid obligations of such Obligor,
enforceable against such Obligor in accordance with Applicable Law (except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors’ rights generally and by
principles of equity).

 

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SECTION 6.5. Financial Information; Undisclosed Liabilities.

(a) All balance sheets, all statements of income and of cash flow and all other
financial information of each of the Parent and its Subsidiaries furnished
pursuant to Section 7.1.1, have been and will for periods following the
Effective Date be prepared in accordance with GAAP and do or will present fairly
the consolidated financial condition of the Persons covered thereby as at the
dates thereof and the results of their operations for the periods then ended.

(b) There are no material liabilities of any Obligor or the Greens Creek Joint
Venture of any kind whatsoever, whether accrued, determined, determinable or
contingent, other than those liabilities provided for or disclosed in the
financial statements or the notes thereto most recently delivered to the
Lenders, those liabilities not required under GAAP to be provided for or
disclosed in the most recently delivered financial statements or the notes
thereto, those liabilities that have been disclosed in the Disclosure Schedule
and liabilities arising in the ordinary course of business since the date of the
most recently delivered financial statements.

SECTION 6.6. No Material Adverse Change. There has been no Material Adverse
Change.

SECTION 6.7. Litigation, Labor Controversies, etc. There is no pending or, to
the knowledge of the Parent or any of its Subsidiaries, threatened litigation,
action, proceeding or labor controversy (including any strikes, walkouts or work
slowdowns)

(a) except as disclosed in Item 6.7 of the Disclosure Schedule, affecting the
Parent or any of its Subsidiaries or the Greens Creek Joint Venture, or any of
their respective properties, businesses or assets which could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect,
and no adverse development has occurred in any labor controversy, litigation,
arbitration or governmental investigation or proceeding disclosed in Item 6.7 of
the Disclosure Schedule which could reasonably be expected to have a material
adverse effect on the outcome for the Parent or its Subsidiaries of such labor
controversy, litigation, arbitration or governmental investigation or
proceeding; or

(b) which purports to affect the legality, validity or enforceability of any
Loan Document.

SECTION 6.8. Subsidiaries. The Parent has no Subsidiaries, except those
Subsidiaries which are identified in Item 6.8 of the Disclosure Schedule, or
which are permitted to have been organized or acquired in accordance with
Sections 7.2.5 or 7.2.9. In addition, set forth in Item 6.8 of the Disclosure
Schedule is an organizational chart of the Parent and each of its Subsidiaries
as of the Effective Date, which includes a description of the Capital Securities
of each Subsidiary and the owners thereof.

SECTION 6.9. Ownership of Properties.

(a) The Parent and each of its Material Subsidiaries owns (i) in the case of
owned real property, good and marketable fee title to, and (ii) in the case of
owned personal property, good and valid title to, or, (iii) in the case of
leased real or personal property, valid and enforceable leasehold interests (as
the case may be) in, all of its material properties and assets (including
material mining, water and other rights or permits associated with its
operations), real and personal, tangible and intangible, of any nature
whatsoever, free and clear in each case of all Liens or claims, except for Liens
permitted pursuant to Section 7.2.3.

 

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(b) Without limiting the generality of the foregoing clause (a), all lands being
mined by the Greens Creek Joint Venture (other than land not material to the
Greens Creek Joint Venture’s production of metals) are (i) patented claims of
the Greens Creek Joint Venture, (ii) unpatented claims of the Greens Creek Joint
Venture or (iii) subject to the Land Exchange Agreement.

SECTION 6.10. Taxes. The Parent and each of its Subsidiaries has filed all tax
returns and reports required by Applicable Law to have been filed by it and has
paid all Taxes thereby shown to be due and owing, except any such Taxes which
are (i) in an aggregate amount less than $500,000 and which non payment thereof
does not result in a Lien on the Collateral that continues for more than 180
days or (ii) being diligently contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with GAAP shall have been set
aside on its books.

SECTION 6.11. Pension and Welfare Plans.

(a) Except as disclosed on Item 6.11 of the Disclosure Schedule, neither the
Parent, nor any of its Subsidiaries, nor any member of their Controlled Group
(i) maintains or contributes to any Pension Plan or Multiemployer Plan, (ii) has
maintained or contributed to any Pension Plan or Multiemployer Plan during the
prior six years, (iii) except as required by Section 4980B of the Code or
similar state law, maintains a Welfare Plan which provides health or welfare
benefits (through the purchase of insurance or otherwise) for any retired or
former employee of the Parent or any of member of its Controlled Group or
coverage after a participant’s termination of employment, or (iv) has incurred
any liability or obligation under the U.S. Worker Adjustment and Retraining
Notification Act or similar state law, which remains unpaid or unsatisfied.

(b) During the twelve-consecutive-month period prior to the Effective Date and
prior to the date of any Credit Extension hereunder, (i) no steps have been
taken to terminate any Pension Plan (other than a standard termination under
Section 4041(b) of ERISA which would not reasonably be expected to have a
Material Adverse Effect), (ii) no contribution failure has occurred with respect
to any Pension Plan sufficient to give rise to a Lien under Section 303(k) of
ERISA, (iii) no determination has been made that a Pension Plan is, or is
expected to be, in “at-risk” status (as defined in Section 303(i)(4)(A) of ERISA
or Section 430(i)(4)(A) of the Code); and (iv) no determination has been made
that a Multiemployer Plan is, or is expected to be, in endangered or critical
status (as defined in Section 305 of ERISA). No condition exists or event or
transaction has occurred with respect to any Pension Plan or Multiemployer Plan
which might result in the incurrence by the Parent or any member of the
Controlled Group of any material liability, fine or penalty. Except as disclosed
in Item 6.11 of the Disclosure Schedule, neither the Parent nor any member of
the Controlled Group has any contingent liability with respect to any
post-retirement benefit under a Welfare Plan, other than liability for
continuation coverage described in Part 6 of Title I of ERISA.

 

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SECTION 6.12. Environmental Warranties. Except as set forth in Item 6.12 of the
Disclosure Schedule:

(a) all facilities and property (including underlying groundwater) owned or
leased by the Parent, by any Subsidiary or by the Greens Creek Joint Venture
have been, and continue to be, owned or leased by the Parent, such Subsidiary or
the Greens Creek Joint Venture in material compliance with all Environmental
Laws, except as, individually or in the aggregate, could not be reasonably
expected to have a Material Adverse Effect;

(b) there have been no past, and there are no pending or threatened written
(i) claims, complaints, notices or requests for information received by the
Parent, by any Subsidiary or by the Greens Creek Joint Venture relative to any
alleged violation of any Environmental Law that, individually or in the
aggregate, have, or could reasonably be expected to have, a Material Adverse
Effect, or (ii) complaints, notices or inquiries to the Parent, any Subsidiary
or to the Greens Creek Joint Venture regarding potential liability under any
Environmental Law, that, individually or in the aggregate, have, or could
reasonably be expected to have, a Material Adverse Effect;

(c) there have been no Releases of Hazardous Materials at, on, under or
migrating from any property now or previously owned or leased by the Parent, by
any Subsidiary or by the Greens Creek Joint Venture that have, or could
reasonably be expected to have, a Material Adverse Effect;

(d) the Parent and Subsidiaries and the Greens Creek Joint Venture have been
issued and are in compliance with all Approvals relating to environmental
matters other than any non-compliance which, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect;

(e) no property now or previously owned or leased by the Parent, by any
Subsidiary or by the Greens Creek Joint Venture is listed or proposed for
listing on the National Priorities List pursuant to CERCLA, on the CERCLIS or on
any similar state list of sites requiring investigation or clean-up;

(f) there are no underground storage tanks, active or abandoned, including
petroleum storage tanks, on or under any property now or previously owned or
leased by the Parent, by any Subsidiary or by the Greens Creek Joint Venture
that, individually or in the aggregate, have, or could reasonably be expected to
have, a Material Adverse Effect;

(g) the Parent, its Subsidiaries and the Greens Creek Joint Venture have not
transported, sent or arranged for the transportation or disposal of any
Hazardous Material to any location which is listed or proposed for listing on
the National Priorities List pursuant to CERCLA, on the CERCLIS or on any
similar state list or which is the subject of federal, state or local
enforcement actions or other investigations which may lead to material claims
(including claims for remedial work, damage to natural resources or personal
injury) against the Parent, any such Subsidiary or the Greens Creek Joint
Venture that, individually or in the aggregate, have, or could reasonably be
expected to have, a Material Adverse Effect;

(h) there are no polychlorinated biphenyls or friable asbestos present at any
property now or previously owned or leased by the Parent, by any Subsidiary or
by the Greens Creek Joint Venture that, individually or in the aggregate, have,
or could reasonably be expected to have, a Material Adverse Effect; and

 

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(i) no other conditions exist at, on or under any property now or previously
owned or leased by the Parent, by any Subsidiary or by the Greens Creek Joint
Venture which, with the passage of time, or the giving of notice or both, would
give rise to liability under any Environmental Law that, individually or in the
aggregate, have, or could reasonably be expected to have, a Material Adverse
Effect.

SECTION 6.13. Accuracy of Information. The factual information heretofore or
contemporaneously furnished in writing on or prior to the date hereof made to
any Secured Party by or on behalf of any Obligor or the Greens Creek Joint
Venture in connection with any Loan Document or any transaction contemplated
hereby when taken together with all reports, statements, schedules and
registration statements included in filings made by the Parent with the SEC
prior to the delivery of such information to the extent provided to the Secured
Parties, does not contain any untrue statement of a material fact and does not
omit to state any material fact necessary to make any such information not
misleading under the circumstances in which made.

SECTION 6.14. Regulations U and X. No Obligor is engaged in the business of
extending credit for the purpose of buying or carrying margin stock, and no
proceeds of the Credit Extension will be used to purchase or carry margin stock
or otherwise for a purpose which violates, or would be inconsistent with, F.R.S.
Board Regulation U or Regulation X. Terms for which meanings are provided in
F.R.S. Board Regulation U or Regulation X or any regulations substituted
therefor, as from time to time in effect, are used in this Section with such
meanings.

SECTION 6.15. Material Contracts. Item 6.15 of the Disclosure Schedule sets
forth a complete and accurate list of all Material Contracts to which the Parent
and each Subsidiary is a party as of the Effective Date and as of the date of
delivery of the most recent Compliance Certificate delivered pursuant to
7.1.1(c), showing as of such date the parties to such Material Contracts, the
dates such Material Contracts were entered into, the subject matter of such
Material Contracts, the aggregate consideration payable to or by the parties
thereto and any other information useful to determine the materiality of such
Material Contract to the business or operations of the Parent or the Subsidiary
party thereto. Neither the Parent nor any Subsidiary is in default under or
relative to any Material Contracts that could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.

SECTION 6.16. Solvency. The Parent and each other Obligor, both before and after
giving effect to the Credit Extension, are Solvent.

SECTION 6.17. Insurance. Each of the Parent and its Material Subsidiaries
maintains (i) insurance to such extent and against such risks as is customary
with Persons of comparable size engaged in the same or similar business and
similarly situated, (ii) worker’s compensation insurance in the amount required
by Applicable Law and (iii) such other insurance as may be required by law.

SECTION 6.18. Condition of Business and Operations. Except as set forth on
Item 6.18 of the Disclosure Schedule, (i) neither the business nor the
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Greens Creek Joint Venture has been disrupted by any casualty, act of God or any
other action, and (ii) no part of any mine, mill or tailings system owned or
operated by the Parent, by any of its Subsidiaries or by the Greens Creek Joint
Venture is experiencing any failure, which disruption or failure could
reasonably be expected to have a Material Adverse Effect.

SECTION 6.19. Compliance with Law, etc. No Obligor is in violation of its
Organic Documents in any material respect. No Obligor is in violation of any
Applicable Law, which violation could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.

SECTION 6.20. Mining Rights. Each of the Parent and its Subsidiaries and the
Greens Creek Joint Venture has acquired all material Mining Rights which are
required in connection with the operation of its respective mines as they are
operated as of the date the representation is made, and has obtained such other
surface and other rights as are necessary for access rights, water rights, plant
sites, tailings disposal, waste dumps, ore dumps, abandoned heaps or ancillary
facilities which are required in connection with each mine. All such Mining
Rights and other rights are sufficient in scope and substance for the operation
of each mine owned or operated by Parent or any of its Subsidiaries as each such
mine is operated as of each date this representation is made.

SECTION 6.21. Greens Creek Operations. The Greens Creek Joint Venture Agreement
is in full force and effect and no material default has occurred and is
continuing thereunder. No transfer of rights and interests to the Secured
Parties as a result of their exercise of rights and remedies under the Loan
Documents would prohibit or limit the Greens Creek Joint Venture or the
operation of the Greens Creek Mine under Applicable Law or prevent the Parent or
any Subsidiary thereof in the Greens Creek Joint Venture from obtaining,
amending, revising, renewing, or maintaining in good standing any permits or
approvals necessary to conduct operations at the Greens Creek Mine.

SECTION 6.22. Indebtedness of the Greens Creek Group. No member of the Greens
Creek Group has incurred any Indebtedness other than Indebtedness permitted
under Section 7.2.15(b).

ARTICLE VII

COVENANTS

SECTION 7.1. Affirmative Covenants. The Parent agrees with each Lender and the
Administrative Agent that, until the Termination Date has occurred, the Parent
will, and will cause its Subsidiaries to, perform or cause to be performed the
obligations set forth below.

SECTION 7.1.1. Financial Information, Reports, Notices, etc. The Parent will
furnish each Lender and the Administrative Agent copies of the following
financial statements, reports, notices and information:

(a) as soon as available and in any event within 45 days after the end of each
of the first three Fiscal Quarters of each Fiscal Year, an unaudited
consolidated balance sheet of the Parent and its Subsidiaries as of the end of
such Fiscal Quarter and consolidated statements of income and cash flow of the
Parent and its Subsidiaries for such Fiscal Quarter and for the period

 

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commencing at the end of the previous Fiscal Year and ending with the end of
such Fiscal Quarter, and including (in each case), in comparative form the
figures for the corresponding Fiscal Quarter in, and year to date portion of,
the immediately preceding Fiscal Year, certified as complete and correct by the
chief financial or accounting Authorized Officer of the Parent (subject to
normal year end audit adjustments);

(b) as soon as available and in any event within 90 days after the end of each
Fiscal Year, a copy of the consolidated balance sheet of the Parent and its
Subsidiaries, and the related consolidated statements of income and cash flow of
the Parent and its Subsidiaries for such Fiscal Year, setting forth in
comparative form the figures for the immediately preceding Fiscal Year, audited
(without any Impermissible Qualification) by independent public accountants
acceptable to the Administrative Agent;

(c) concurrently with the delivery of the financial information pursuant to
clauses (a) and (b), a Compliance Certificate, executed by the chief financial
or accounting Authorized Officer of the Parent, (i) showing compliance with the
financial covenants set forth in Section 7.2.4, (ii) stating that no Default has
occurred and is continuing (or, if a Default has occurred, specifying the
details of such Default and the action that the Parent or an Obligor has taken
or proposes to take with respect thereto), (iii) designating one or more of the
Parent’s Subsidiaries as Material Subsidiaries if, in the absence of such
designation, the aggregate assets or revenues of all Immaterial Subsidiaries of
the Parent would exceed the aggregate amounts set forth in clauses (iii) and
(iv) of the first proviso to the definition of “Immaterial Subsidiary”,
(iv) certifying that the Subsidiaries of the Parent previously designated as
Immaterial Subsidiaries remain Immaterial Subsidiaries as of the date thereof
and (v) in the case of a Compliance Certificate delivered concurrently with the
financial information pursuant to clause (b) (relative to the 2008 Fiscal Year
and thereafter), the amount of Excess Cash Flow for such Fiscal Year (together
with a detailed calculation thereof);

(d) as soon as possible and in any event within three days after the Parent or
any other Obligor obtains knowledge of the occurrence of a Default, a statement
of an Authorized Officer of the Parent setting forth details of such Default and
the action which the Parent or such Obligor has taken and proposes to take with
respect thereto;

(e) at the time of each prepayment required under Section 3.1.1, (x) a
certificate signed by an Authorized Officer of the Borrower setting forth in
reasonable detail the amount of such prepayment and (y) to the extent
practicable, at least three days’ prior written notice of such prepayment
specifying the principal amount of Loans to be prepaid;

(f) as soon as possible and in any event within five days after the Parent or
any other Obligor obtains knowledge of (i) the occurrence of any material
adverse development with respect to any litigation, action, proceeding or labor
controversy described in Item 6.7 of the Disclosure Schedule which could
reasonably be expected to have a material adverse effect on the outcome of such
litigation, action, proceeding or labor controversy or (ii) the commencement of
any litigation, action, proceeding or labor controversy of the type and
materiality described in Section 6.7, notice thereof and, to the extent the
Administrative Agent requests, copies of all documentation relating thereto;

 

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(g) promptly after the sending or filing thereof, copies of all reports,
notices, prospectuses and registration statements which any Obligor files with
the SEC or any national securities exchange;

(h) promptly upon becoming aware of (i) the institution of any steps by any
Person to terminate any Pension Plan, (ii) the failure to make a required
contribution to any Pension Plan if such failure is sufficient to give rise to a
Lien under Section 303(k) of ERISA, (iii) the taking of any action with respect
to a Pension Plan which could result in the requirement that any Obligor furnish
a bond or other security to the PBGC or such Pension Plan, (iv) a determination
that a Pension Plan is, or is expected to be, in “at-risk” status (as defined in
Section 303(i)(4)(A) of ERISA or Section 430(i)(4)(A) of the Code), or a
determination that a Multiemployer Plan is, or is expected to be, in endangered
or critical status (as defined in Section 305 of ERISA), or (v) the occurrence
of any event with respect to any Pension Plan or Multiemployer Plan which could
result in the incurrence by any Obligor of any material liability, fine or
penalty, notice thereof and copies of all documentation relating thereto;

(i) promptly upon receipt thereof, copies of all “management letters” submitted
to the Parent or any other Obligor by the independent public accountants
referred to in clause (b) in connection with each audit made by such
accountants;

(j) promptly following the mailing or receipt of any notice or report delivered
under the terms of any Permitted Additional Indebtedness, any Subordinated Debt
or any Designated Preferred Stock Documents, copies of such notice or report;

(k) promptly following receipt thereof by the Parent, (i) a copy of the monthly
progress reports on the operations of the Greens Creek Joint Venture and each
other operating mine of the Parent and its Subsidiaries and monthly supplemental
financial data with respect to the Greens Creek Joint Venture and each other
operating mine of the Parent and its Subsidiaries, for the immediately preceding
calendar month and (ii) a copy of the unaudited balance sheet and the related
statements of income and cash flow of the Greens Creek Joint Venture for each
fiscal year, setting forth in comparative form the figures for the immediately
preceding fiscal year;

(l) as soon as available and, in any event, within

(i) 45 days after the end of each Fiscal Year, updated capital, operating and
exploration budgets of the Parent and its Material Subsidiaries, certified by an
Authorized Officer of the Parent;

(ii) 90 days after the end of each Fiscal Year, an updated Hecla Mine Plan,
certified by an Authorized Officer of the Parent; and

(iii) 90 days after the end of each Fiscal Year, updated mineral reserve
statements for the Parent and its Subsidiaries, certified by an Authorized
Officer of the Parent;

(m) as soon as possible and in any event within three days after the Parent or
any other Obligor obtains knowledge of the commencement of any suit, action or
proceeding arising under any Environmental Laws which could reasonably be
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Effect, or any other adverse claim asserted against any Obligor or with respect
to its properties which could reasonably be expected to result in a Material
Adverse Effect, notice thereof and copies of all documentation relating thereto;

(n) promptly upon the occurrence of any material event relating to the Greens
Creek Mine and each other operating mine of the Parent and its Subsidiaries,
including any unscheduled shutdowns of, or disruptions to, the mining operations
of the Greens Creek Mine and each other operating mine of the Parent and its
Subsidiaries, notice thereof;

(o) promptly notify the Administrative Agent and provide copies upon receipt of
all written claims, complaints, notices or inquiries relating to, or as to
compliance with, laws relating to employee health and safety (including the
Occupational Safety and Health Act, 29 U.S.C.A. §651 et. seq. and the Federal
Mine Safety and Health Act, 30 U.S.C.A. §801 et. seq.), to the extent conditions
described in such claims, complaints, notices and inquiries could reasonably be
expected to result in a liability for the Parent and its Subsidiaries in an
aggregate amount exceeding $1,000,000 and shall promptly resolve any material
non-compliance with such laws (except to the extent such non-compliance is being
diligently contested in good faith) and keep its property free of any Lien
imposed by such laws;

(p) as soon as available and in any event within 45 days after the end of each
of the Fiscal Quarters of each Fiscal Year, reports with respect to all Hedging
Agreements entered into by Parent and its Subsidiaries as contemplated by this
Agreement, which reports shall be in form and substance satisfactory to the
Administrative Agent; and

(q) such other financial and other information as any Secured Party may from
time to time reasonably request (including information and reports in such
detail as the Administrative Agent may request with respect to the terms of and
information provided pursuant to the Compliance Certificate).

SECTION 7.1.2. Maintenance of Existence; Compliance with Contracts, Laws, etc.
Subject to the provisions of this Agreement, the Parent will, and will cause
each of its Material Subsidiaries to, preserve and maintain its legal existence
(except, in the case of Material Subsidiaries, as otherwise permitted by
Section 7.2.10), rights, privileges and franchises, and to be duly qualified and
in good standing in each jurisdiction in which such Person owns properties or
carries on business and in any other jurisdiction in which such qualification is
necessary or desirable in view of its business and operations or the ownership
of its properties, except where the failure to be so qualified and in good
standing could not reasonably be expected to have, either individually, or in
the aggregate, a Material Adverse Effect. The Parent will, and will cause each
of its Subsidiaries to, comply in all material respects with all Applicable Laws
that are material to the Parent and its Subsidiaries and the Greens Creek Joint
Venture, including the payment (before the same become delinquent) of all Taxes
imposed upon the Parent or its Subsidiaries or upon their property, except to
the extent being diligently contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with GAAP have been set aside on
the books of the Parent or its Subsidiaries, as applicable.

SECTION 7.1.3. Maintenance of Properties. The Parent will, and will cause each
of its Material Subsidiaries to, maintain, preserve, protect and keep

 

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(i) its interests in its properties as necessary for it to be able to develop
and operate its mines in accordance with normal industry practice; and

(ii) its properties in good repair, working order and condition (ordinary wear
and tear and casualty and condemnation excepted), and make necessary repairs,
renewals and replacements in accordance with normal industry practice so that
the business carried on by it may be properly conducted at all times, unless the
Parent determines in good faith that the continued maintenance of any such
property is no longer economically desirable, necessary or useful to the
business of the Parent or any Material Subsidiary or the Disposition of such
property is otherwise permitted by Sections 7.2.9 or 7.2.10.

SECTION 7.1.4. Insurance. The Parent will, and will cause each Subsidiary to,
maintain, (x) insurance on its property with financially sound and reputable
insurance companies against loss and damage in at least the amounts (and with
only those deductibles) customarily maintained, and against such risks as are
typically insured against in the same general area, by Persons of comparable
size engaged in the same or similar business as the Parent and its Subsidiaries
and the Greens Creek Joint Venture and (y) all worker’s compensation, employer’s
liability insurance or similar insurance as may be required under Applicable
Law. Without limiting the foregoing, all insurance policies required pursuant to
this Section shall:

(a) name the Administrative Agent on behalf of the Secured Parties as loss payee
(in the case of property insurance) or additional insured (in the case of
liability insurance), as applicable, and provide that no cancellation or
modification of the policies will be made without 30 days’ prior written notice
to the Administrative Agent; and

(b) be in addition to any requirements to maintain specific types of insurance
contained in the other Loan Documents.

SECTION 7.1.5. Books and Records. The Parent will, and will cause each
Subsidiary to, keep books and records in accordance with GAAP which accurately
reflect all of its business affairs and transactions.

SECTION 7.1.6. Visitation.

(a) The Parent will, and will cause each Subsidiary to, permit each Secured
Party or any of their respective representatives, at reasonable times and
intervals upon reasonable notice to the Parent, to visit each Obligor’s offices,
to discuss such Obligor’s financial matters with its officers and employees, and
its independent public accountants (and the Parent hereby authorizes such
independent public accountant to discuss each Obligor’s financial matters with
each Secured Party or their representatives whether or not any representative of
such Obligor is present) and to examine (and photocopy extracts from) any of its
books and records. The Parent shall pay any reasonable and out-of-pocket
expenses incurred in connection with any Secured Party’s exercise of its rights
pursuant to this Section (including fees of such independent public accountant);
provided that, so long as no Default has occurred and is continuing, the Parent
shall only be required to pay such reasonable and out-of-pocket expenses
incurred in connection with one such visit and/or discussion per Fiscal Year.

 

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(b) The Parent will provide to the Administrative Agent written or verbal
reports on the status of the litigation set forth in or referred to in Item 6.7
of the Disclosure Schedule, at such times and intervals (but in any event no
more than once a month, unless there has been a material adverse development
with respect to the outcome of such litigation) as the Administrative Agent
shall reasonably determine to assess the status and progress of such litigation,
including a report on the issuance of significant rulings and the taking of
important testimony. The Parent will also cause the Parent’s legal counsel in
connection with such litigation to be available to discuss (provided the
Parent’s General Counsel or such counsel’s designee has been provided a
reasonable opportunity to be present during such discussion) any such reports
with the Administrative Agent at the reasonable request of the Administrative
Agent (which requests shall not be more than once a month, unless there has been
a material adverse development with respect to the outcome of such litigation);
provided, however, that the terms of this clause (b) shall not be deemed to
authorize or require any attorney to disclose information that, if disclosed
pursuant to this clause (b), would, in such attorney’s written opinion, violate
the attorney-client privilege between such attorney and the Parent. The Parent
shall pay the fees of counsel incurred in connection with the Administrative
Agent’s exercise of its rights pursuant to this Section.

SECTION 7.1.7. Environmental Law Covenant. The Parent will, and will cause each
of its Subsidiaries to:

(a) use and operate all of its and their facilities and properties in compliance
in all material respects with all Environmental Laws material to the Parent and
its Subsidiaries, keep all necessary Approvals relating to environmental matters
material to the Parent and its Subsidiaries in effect, and remain in material
compliance therewith, and handle all Hazardous Materials in compliance in all
material respects with all such Environmental Laws; and

(b) promptly notify the Administrative Agent and provide copies upon receipt of
all written claims, complaints, notices or inquiries relating to the condition
of its facilities and properties in respect of, or as to compliance with,
Environmental Laws that, if adversely determined, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect, and
shall keep its property free of any Lien imposed by any Environmental Law.

SECTION 7.1.8. Future Guarantors, Security, etc. Subject to the last paragraph
of this Section 7.1.8, the Parent will, upon any Person becoming either a direct
or indirect Material Subsidiary, or upon any U.S. Subsidiary satisfying the
criteria of a Material U.S. Subsidiary or any Foreign Subsidiary satisfying the
criteria of a Pledged Foreign Subsidiary, and with respect to any Pledged
Foreign Subsidiary that exists on the Effective Date that is not a party to a
Pledge Agreement or a Foreign Pledge Agreement or the Capital Securities of
which have not been pledged under a Pledge Agreement or a Foreign Pledge
Agreement:

(a) cause any Subsidiary of a Borrower or Hecla Admiralty to execute and deliver
to the Administrative Agent a supplement to the Security Agreement substantially
in the form attached thereto as Annex I;

(b) cause any Person that is either a Material U.S. Subsidiary or a Pledged
Foreign Subsidiary to execute and deliver to the Administrative Agent a
supplement to the Subsidiary Guaranty substantially in the form attached thereto
as Annex I, in each case for the benefit of the Secured Parties;

 

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(c) cause each Person holding Capital Securities in a Material U.S. Subsidiary
or a Pledged Foreign Subsidiary to execute and deliver, to the Administrative
Agent a supplement to the Pledge Agreement, substantially in the form attached
thereto as Annex I (and, if applicable, a Foreign Pledge Agreement) and shall,
pursuant to the Pledge Agreement (and, if applicable, a Foreign Pledge
Agreement), pledge and deliver to the Administrative Agent, for the benefit of
the Secured Parties, all of the outstanding Capital Securities of each Material
U.S. Subsidiary or Foreign Pledged Subsidiary owned by the Parent or such
Subsidiary and take all other action required under the Pledge Agreement (a
Foreign Pledge Agreement as the case may be) together with undated stock powers
or equivalent instruments of transfer reasonably satisfactory to the
Administrative Agent for such certificates or such other evidence of beneficial
ownership, executed in blank (or, if any such Capital Securities are
uncertificated, confirmation and evidence reasonably satisfactory to the
Administrative Agent that the security interest in such uncertificated
securities has been perfected in accordance with the UCC or any similar or local
law which may be applicable); provided that, with respect to any Person holding
Capital Securities in any Foreign Subsidiary that is a Pledged Foreign
Subsidiary, such Person will have 120 days to use commercially reasonable
efforts to comply with this clause (c) (or such longer time as the
Administrative Agent permits in its sole discretion);

(d) deliver to the Administrative Agent as to each such Person certified copies
of UCC Requests for Information or Copies (Form UCC-11), or a similar search
report certified by a party reasonably acceptable to the Administrative Agent,
dated a date reasonably near (but prior to) the date of any such Person becoming
a direct or indirect Subsidiary, listing all effective financing statements, tax
liens and judgment liens which name such Person as the debtor and which are
filed in the jurisdictions in which filings are to be made pursuant to this
Agreement and the other Loan Documents, and in such other jurisdictions as the
Administrative Agent may reasonably request, together with copies of such
financing statements (none of which (other than financing statements (x) filed
pursuant to the terms hereof in favor of the Administrative Agent, (y) being
terminated pursuant to termination statements that are to be delivered on or
prior to the date such Person becomes such Subsidiary or (z) in respect of
Permitted Liens) shall cover any of the collateral described in any Loan
Document);

(e) deliver to the Administrative Agent as to each such Person joined to the
Security Agreement, Filing Statements naming such Person as the debtor and the
Administrative Agent as the secured party, for the benefit of the Secured
Parties, suitable for filing under the UCC of all jurisdictions as may be
necessary or, in the reasonable opinion of the Administrative Agent, desirable
to perfect the security interest of the Administrative Agent pursuant to any
security agreement entered into by such Person; and

(f) subject to the provisions in clause (c) above, the Administrative Agent
shall have received such customary opinions of legal counsel as the
Administrative Agent may reasonably request, which legal opinions shall be in
form and substance reasonably satisfactory to the Administrative Agent.

 

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Notwithstanding anything to the contrary in any Loan Document, (x) no more than
65% of the Voting Securities of any Foreign Subsidiary shall be pledged as
security for the Obligations, (y) no Foreign Subsidiary shall be required to
pledge as security for the Obligations any of its assets and (z) no Foreign
Subsidiary shall be required to guarantee the Obligations either through a
Subsidiary Guaranty or otherwise, in the case of clauses (x), (y) or (z), if
such pledge or guaranty results in adverse tax consequences for the Parent and
its Subsidiaries, taken as a whole.

SECTION 7.1.9. Further Assurances. Notwithstanding anything contained in the
Loan Documents to the contrary, the Parent will, and will cause each Subsidiary
to, execute any documents, Filing Statements, agreements and instruments, and
take all further action that may be required under Applicable Law, or that the
Administrative Agent may reasonably request, in order to, (a) subject to
Section 7.1.8, effectuate the transactions contemplated by the Loan Documents
and grant, preserve, protect and perfect the validity and first priority of the
Liens created or intended to be created by the Loan Documents or (b) at the
request of the Administrative Agent, grant, preserve, protect and perfect the
validity and first priority of the Liens on all assets and other property (real
and personal) of the Borrowers and Hecla Admiralty and all other Collateral.
Without limiting the generality of the foregoing, the Parent shall provide, upon
the request of the Administrative Agent, copies of all Approvals referred to in
Section 6.3 and Section 6.20 and related information.

SECTION 7.1.10. Material Subsidiaries. In the event of a transfer of assets from
the Parent or any of its Subsidiaries to an Immaterial Subsidiary, the Parent
shall designate, in a notice to the Lenders, (i) such Immaterial Subsidiary as a
Material Subsidiary if such Subsidiary would be a Material Subsidiary as of the
last day of the Fiscal Quarter during which such transfer occurs and (ii) one or
more of its other Subsidiaries as Material Subsidiaries if, in the absence of
such designation, the aggregate assets or revenues of all Immaterial
Subsidiaries of the Parent would exceed the aggregate amounts set forth in
clauses (iii) and (iv) of the first proviso in the definition of “Immaterial
Subsidiary”.

SECTION 7.1.11. Independent Corporate Existence. The Parent shall:

(a) cause each Material Subsidiary to comply with the terms of its limited
liability company agreement, articles of incorporation, by-laws (as the case may
be) and other Organic Documents; and

(b) without limiting the effect of the preceding clause (a),

(i) observe all organizational formalities, including holding appropriate
meetings or actions by written consent, as required by all Applicable Law;

(ii) cause each Material Subsidiary to maintain an arm’s-length relationship
with its Affiliates and not hold itself out as being liable for the debts of any
of its Affiliates (other than with respect to obligations expressly permitted
hereunder); and

(iii) cause each Material Subsidiary (A) to keep its assets and its liabilities
wholly separate from those of all other entities, including, but not limited to
its Affiliates, and (B) to maintain its assets and liabilities in such a manner
that it is not materially costly or difficult to segregate, ascertain or
otherwise identify the Subsidiary’s individual assets and liabilities from those
of any other Person.

 

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All consolidated financial statements of the Parent furnished by the Parent or
any of its Subsidiaries shall clearly indicate that all of the interests in the
Greens Creek Joint Venture held by the Borrowers are held separate and apart
from the assets of the Parent and the other Subsidiaries of the Parent.

SECTION 7.1.12. Reserved.

SECTION 7.1.13. Maintenance of Mining Rights. The Parent will, and will cause
each Subsidiary and the Greens Creek Joint Venture to maintain all material
Mining Rights which are required in connection with the operation of its mines
as they are then operated, and will obtain such other surface and other rights
as are necessary for access rights, water rights, plant sites, tailings
disposal, waste dumps, ore dumps, abandoned heaps or ancillary facilities which
are required in connection with each mine. All such Mining Rights and other
rights will be sufficient in scope and substance for the operation of each mine
then owned or operated by Parent or any of its Subsidiaries or the Greens Creek
Joint Venture as they are then operated.

SECTION 7.1.14. Issuance of Subordinated Debt; Status of Obligations as Senior
Indebtedness, etc. To the extent the Parent issues any Subordinated Debt, the
Parent shall have the power and authority to incur such Subordinated Debt as
provided for under the Subordinated Debt Documents applicable thereto and shall
have duly authorized, executed and delivered the Subordinated Debt Documents
applicable to such Subordinated Debt. To the extent the Parent issues any
Subordinated Debt, the Parent shall issue, pursuant to due authorization, such
Subordinated Debt under the applicable Subordinated Debt Documents, and such
Subordinated Debt Documents shall constitute the legal, valid and binding
obligations of the Parent enforceable against the Parent in accordance with its
terms (except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors’ rights generally
and by principles of equity). The subordination provisions of all such
Subordinated Debt contained in the related Subordinated Debt Documents shall be
enforceable against the holders of the Subordinated Debt by the holder of any
“Senior Indebtedness” or similar term referring to the Obligations (as defined
in such Subordinated Debt Documents). To the extent any Designated Preferred
Stock is issued and outstanding, such Designated Preferred Stock shall contain
provisions which prohibit the declaration, payment or setting aside of funds for
payment of dividends on such Designated Preferred Stock following the occurrence
and during the continuance of a Default and the holder of any Senior
Indebtedness or similar term referring to the Obligations (as defined in the
applicable Designated Preferred Stock Documents) shall be a third party
beneficiary of such provisions. All Obligations, including those to pay
principal of and interest (including post-petition interest, whether or not
allowed as a claim under bankruptcy or similar laws) on the Loans and fees and
expenses in connection therewith, constitute “Senior Indebtedness” or similar
term in the Subordinated Debt Documents relating to the Obligations, and all
such Obligations are entitled to the subordination provisions of the
Subordinated Debt Documents.

SECTION 7.1.15. Sale Price of Gold, Silver, Lead and Zinc. The Parent and its
Subsidiaries shall sell all gold, silver, lead and zinc on fair and reasonable
terms, at prices and other terms no less favorable to the Parent or such
Subsidiary than it could obtain in an arm’s length transaction with a Person
that is not an Affiliate.

 

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SECTION 7.1.16. Post Closing. (a) Within thirty (30) days after the Effective
Date, the Administrative Agent shall have received a title opinion and a Deed of
Trust opinion, addressed to the Administrative Agent and all Lenders, from Joe
Perkins, counsel to the Obligors, in form and substance satisfactory to the
Lenders.

(b) Within ninety (90) days after the Effective Date, or such longer period in
the Administrative Agent’s sole discretion, the Administrative Agent shall have
received (i) an executed Canadian Security Agreement (the “Canadian Security
Agreement”) among the Borrowers, Hecla Admiralty and the Administrative Agent,
(ii) filed PPSA financing statements that the Administrative Agent may
reasonably require in order to perfect its first priority security interest in
the assets subject to the Canadian Security Agreement and (iii) a signed
favorable opinion of Canadian counsel with respect to the Canadian Security
Agreement.

(c) Within five (5) Business Days of the Effective Date, the Administrative
Agent shall have received the fully executed Greens Creek Demand Note.

SECTION 7.2. Negative Covenants. The Parent covenants and agrees with each
Lender and the Administrative Agent that until the Termination Date has
occurred, the Parent will, and will cause its Subsidiaries to, perform or cause
to be performed the obligations set forth below.

SECTION 7.2.1. Business Activities. The Parent will not, and will not permit any
of its Subsidiaries to, (a) engage in any business activity except those
business activities engaged in on the date of this Agreement and activities
reasonably incidental thereto, or (b) without limiting the effect of any
provision contained herein, in the case of the Parent, transfer any assets to a
Subsidiary, other than (i) pursuant to Section 7.2.10 or (ii) cash pursuant to a
loan, advance or other Investment permitted pursuant to clauses (e), and (f) of
Section 7.2.2, clauses (e), (f), (h), (i) and (k) of Section 7.2.5 or
Section 7.2.9.

SECTION 7.2.2. Indebtedness. The Parent will not, and will not permit any of its
Subsidiaries to, create, incur, assume or permit to exist any Indebtedness,
other than:

(a) Indebtedness in respect of the Obligations;

(b) Indebtedness existing as of the Effective Date which is identified in
Item 7.2.2(b) of the Disclosure Schedule, and any Refinancing of such
Indebtedness;

(c) unsecured and secured (to the extent permitted under clause (c) of Section
7.2.3) Indebtedness in respect of performance bonds and reclamation bonds (other
than the Gold Participation Bonds) and cash deposits provided in the ordinary
course of business; provided that (i) the amount of such Indebtedness
outstanding with respect to the Greens Creek Mine shall not exceed at any time
$60,000,000, (ii) the aggregate amount of all such Indebtedness outstanding
pursuant to this clause (c) shall not at any time exceed $100,000,000,
(iii) with respect to the Greens Creek Mine and Lucky Friday Mine, Indebtedness
under this clause shall only be permitted to the extent (A) required by a
Governmental Authority or a recognized Indian tribe with applicable jurisdiction
and authority and (B) the Parent shall have provided to the Administrative Agent
a written copy of each order or agreement imposing or increasing (or any other
requirements in respect of) the amount of any such obligation after the
Effective Date;

 

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(d) Indebtedness evidencing the deferred purchase price of newly acquired
property or incurred to finance the acquisition of equipment of the Parent and
its Subsidiaries (pursuant to purchase money mortgages or otherwise, whether
owed to the seller or a third party) used in the ordinary course of business of
the Parent and its Subsidiaries (provided that, such Indebtedness is incurred
within 90 days of the acquisition of such property) and in respect of
Capitalized Lease Liabilities; provided that, the aggregate amount of all
Indebtedness outstanding pursuant to this clause (d) shall not at any time
exceed $25,000,000;

(e) Indebtedness of any Subsidiary (other than a Borrower or Hecla Admiralty)
owing to the Parent or any other Subsidiary (but only a Subsidiary Guarantor if
the Subsidiary owing such Indebtedness is a Subsidiary Guarantor);

(f) unsecured Indebtedness of the Parent or a Subsidiary Guarantor (other than
Hecla Admiralty) owing to a Subsidiary that has previously executed and
delivered to the Administrative Agent the Interco Subordination Agreement
(provided that, no payment of principal or interest shall be made in respect of
such Indebtedness if a Default or Event of Default has occurred and is then
continuing or would result therefrom);

(g) unsecured Subordinated Debt of the Parent or any of its Subsidiaries (other
than the Borrowers and Hecla Admiralty) and/or Designated Preferred Stock of the
Parent incurred pursuant to the terms of the Subordinated Debt Documents or
Designated Preferred Stock Documents, as applicable, and Refinancings (which
continue to satisfy the terms of the definition of “Subordinated Debt” or
“Designated Preferred Stock” as the case may be); provided that the
Administrative Agent shall have received prior to the incurrence thereof a
Compliance Certificate for the period of four full Fiscal Quarters immediately
preceding such incurrence (prepared in good faith and in a manner and using such
methodology which is consistent with the most recent financial statements and
Compliance Certificates delivered pursuant to Section 7.1.1) giving pro forma
effect to such incurrence and evidencing compliance with the covenants set forth
in Section 7.2.4; and provided further that all Contingent Liabilities of the
Obligors in respect of such Subordinated Debt shall be subordinated to the
Obligations on substantially the same terms as the Subordinated Debt is
subordinated to the Obligations.

(h) Indebtedness of a Subsidiary (including a Subsidiary acquired pursuant to a
Permitted Acquisition) of the Parent that is not a Borrower or a Subsidiary
Guarantor; provided that no Obligor is providing any credit support for, or a
guarantee of, any such Indebtedness, and such Indebtedness is for all purposes
non-recourse to the Obligors and their respective assets;

(i) Permitted Additional Indebtedness; provided that the Administrative Agent
shall have received prior to the incurrence thereof a Compliance Certificate for
the period of four full Fiscal Quarters immediately preceding such incurrence
(prepared in good faith and in a manner and using such methodology which is
consistent with the most recent financial statements and Compliance Certificates
delivered pursuant to Section 7.1.1) giving pro forma effect to such incurrence
and evidencing compliance with the covenants set forth in Section 7.2.4;

 

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(j) Indebtedness consisting of Earn-out Obligations; provided that such Earn-out
Obligations are unsecured;

(k) Hedging Obligations under Hedging Agreements permitted under Section 7.2.14;

(l) Indebtedness in respect of Gold Participation Bonds and Contingent
Liabilities of the Parent with respect thereto;

(m) secured or unsecured Indebtedness of the Parent or any Subsidiary (other
than any Borrower or Hecla Admiralty) in a maximum aggregate amount not to
exceed $75,000,000 ; provided that (A) the Administrative Agent shall have
received prior to the incurrence thereof a Compliance Certificate for the period
of four full Fiscal Quarters immediately preceding such incurrence (prepared in
good faith and in a manner and using such methodology which is consistent with
the most recent financial statements and Compliance Certificates delivered
pursuant to Section 7.1.1) giving pro forma effect to such incurrence and
evidencing compliance with the covenants set forth in Section 7.2.4 and (B) any
such Indebtedness (i) shall be non-recourse to any of the Greens Creek Group or
any assets or property of any of the Greens Creek Group, (ii) shall not be
subject to financial covenants that are more restrictive on any Obligor than the
financial covenants contained herein, (iii) does not have a scheduled final
maturity prior to the Stated Maturity Date and (iv) to the extent secured, shall
not be secured by a Lien on the Collateral; and

(n) Indebtedness under the Greens Creek Demand Note;

provided that no Indebtedness otherwise permitted by clauses (d), (e), (g), (h),
(i), (l) or (m) shall be assumed, created or otherwise incurred if a Default has
occurred and is then continuing or would result therefrom.

SECTION 7.2.3. Liens. The Parent will not, and will not permit any of its
Subsidiaries to, create, incur, assume or permit to exist any Lien upon any of
its property (including Capital Securities of any Person), revenues or assets,
whether now owned or hereafter acquired, except:

(a) Liens securing payment of the Obligations;

(b) Liens existing as of the Effective Date and disclosed in Item 7.2.3(b) of
the Disclosure Schedule securing Indebtedness described in clause (b) of
Section 7.2.2, and Refinancings of such Indebtedness; provided, no such Lien
shall encumber any additional property and the amount of Indebtedness secured by
such Lien is not increased from that existing on the Effective Date (as such
Indebtedness may have been permanently reduced subsequent to the Effective
Date);

(c) Liens on cash and Cash Equivalent Investments securing Indebtedness of the
type permitted under clause (c) of Section 7.2.2;

(d) Liens securing Indebtedness of the type permitted under clause (d) of
Section 7.2.2; provided that, (i) such Lien is granted within 90 days after such
Indebtedness is incurred, (ii) the Indebtedness secured thereby does not exceed
the fair market value of the applicable property, improvements or equipment at
the time of such acquisition (or construction) and (iii) such Lien secures only
the assets that are the subject of the Indebtedness referred to in such clause;

 

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(e) Liens securing Indebtedness permitted by clause (h) of Section 7.2.2;
provided, however, that such Liens existed prior to such Person becoming a
Subsidiary and were not created in anticipation thereof;

(f) Liens in favor of carriers, warehousemen, mechanics, materialmen and
landlords granted in the ordinary course of business for amounts not overdue or
being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have been set aside on its
books;

(g) Liens incurred or deposits made in the ordinary course of business (i) in
connection with worker’s compensation, unemployment insurance or other forms of
governmental insurance or benefits (other than, for the avoidance of doubt,
Liens in favor of the PBGC), or (ii) to secure performance of tenders, statutory
obligations, bids, leases or other similar obligations (other than for borrowed
money) entered into in the ordinary course of business or to secure obligations
on performance bonds (in each case other than the bonds and deposits referenced
in clause (c) of Section 7.2.2);

(h) judgment Liens of $1,000,000 or less, provided that the aggregate amount of
all judgment Liens does not exceed $5,000,000 and (ii) other judgment Liens in
existence for less than 30 days after the entry thereof or with respect to which
execution has been stayed or the payment of which is covered in full (subject to
a customary deductible) by insurance maintained with responsible insurance
companies which have acknowledged their responsibility to cover such judgment
and which do not otherwise result in an Event of Default under Section 8.1.6;

(i) easements, rights-of-way, zoning restrictions, minor defects or
irregularities in title and other similar encumbrances not interfering in any
material respect with the value or use of the property to which such Lien is
attached;

(j) Liens for Taxes not at the time delinquent or thereafter payable without
penalty or being diligently contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with GAAP shall have been set
aside on its books;

(k) Liens on assets located outside the United States to secure statutory
obligations under the laws of foreign jurisdictions; and

(l) Liens on property of the Parent and the Subsidiaries (other than the
Borrowers and Hecla Admiralty), other than the Collateral.

SECTION 7.2.4. Financial Condition and Operations. Neither Parent nor any
Borrower will permit any of the events set forth below to occur:

(a) Tangible Net Worth to be less than or equal to $500,000,000;

(b) the Leverage Ratio to be greater than 3.00 to 1.00;

 

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(c) the Interest Coverage Ratio to be less than 3.00 to 1.00; and

(d) the Current Ratio to be less than 1.10 to 1.00.

SECTION 7.2.5. Investments. The Parent will not, and will not permit any of its
Subsidiaries to, purchase, make, incur, assume or permit to exist any Investment
in any other Person or enter into any joint venture with any other Person or
Persons, except:

(a) Investments existing on the Effective Date and identified in Item 7.2.5(a)
of the Disclosure Schedule;

(b) Cash Equivalent Investments;

(c) Investments received in connection with the bankruptcy or reorganization of,
or settlement of delinquent accounts and disputes with, customers and suppliers,
in each case in the ordinary course of business;

(d) Investments constituting Capital Expenditures;

(e) Investments permitted by clauses (e), (f), or (n) of Section 7.2.2;

(f) Investments by way of contributions to capital or purchases of Capital
Securities (i) by the Parent in any Subsidiaries or by any Subsidiary in other
Subsidiaries or (ii) by any Subsidiary in the Parent;

(g) Investments constituting (i) accounts receivable arising, (ii) trade debt
granted, or (iii) deposits made in connection with the purchase price of goods
or services, in each case in the ordinary course of business;

(h) Investments constituting (i) Permitted Acquisitions and (ii) the San Juan
Silver Mining Joint Venture;

(i) Investments constituting the incurrence of development costs and the entry
into options and leases to mine real property to the extent incurred or entered
into in the ordinary course of business consistent with past practice;

(j) Investments consisting of any deferred portion of the sales price received
by the Parent or any Subsidiary in connection with any Disposition permitted
under Section 7.2.10;

(k) to the extent permitted under Applicable Law, advances or loans to
employees, directors or officers not to exceed $2,000,000 in the aggregate at
any time outstanding;

(l) other Investments in an aggregate amount not to exceed $30,000,000 at any
time; and

(m) Investments made by the Parent with Capital Securities of the Parent so long
as no Event of Default is continuing prior to, and no Event of Default results
from, such Investment;

provided that in respect of this Section 7.2.5,

 

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(i) any Investment which when made complies with the requirements of the
definition of the term “Cash Equivalent Investment” may continue to be held
notwithstanding that such Investment if made thereafter would not comply with
such requirements;

(ii) all Investments in all Subsidiaries shall have been pledged to the
Administrative Agent (for the benefit of the Secured Parties) to the extent
required by Section 7.1.8 or as otherwise required under the Loan Documents;

(iii) with respect to any Specified Investments, on the date such Specified
Investment is made, the amount cash being used to make such Specified
Investments (other than the Greens Creek Demand Note) on such date shall not
exceed the then amount of Funds Available for Specified Investments as of such
date; and

(iv) no Specified Investment shall be permitted to be made (other than under the
Greens Creek Demand Note) if any Default has occurred and is continuing or would
result therefrom.

SECTION 7.2.6. Restricted Payments, etc. The Parent will not, and will not
permit any of its Subsidiaries to, declare or make a Restricted Payment, or make
any deposit for any Restricted Payment, other than

(a) Restricted Payments made by wholly-owned Subsidiaries to the Parent or other
wholly-owned Subsidiaries (provided that (x) with respect to any Restricted
Payment referenced in clause (i) of the definition thereof, if any Default has
occurred and is continuing or would result therefrom and (y) with respect to any
Restricted Payment referenced in clause (ii) of the definition thereof such
Restricted Payment shall be made in cash and if any Default has occurred and is
continuing or would result therefrom and the Required Lenders have notified the
Parent that the payments made under the Greens Creek Demand Note must be
included in the limitation described below, the aggregate amount of Restricted
Payments permitted to be made under this clause (a) shall not exceed $6,000,000
per each Fiscal Quarter or $20,000,000 per each Fiscal Year (excluding, for
purposes of these dollar limits, payments (which are consistent with past
practices) made under the Greens Creek Demand Note until such time that the
Required Lenders notify the Parent that such payments must be included in such
limitation) and, in addition, any Restricted Payment referenced in clause (i) of
the definition thereof shall also not exceed the amount necessary for the
purpose of paying, so long as all such payments are promptly used by the Parent
to pay, payroll, operating, and administrative expenses incurred in the ordinary
course of business, franchise or similar taxes and other similar taxes, fees and
expenses required to maintain the Parents corporate existence);

(b) Restricted Payments made by non-wholly-owned Subsidiaries that are not
Obligors to its shareholders or members generally so long as the Parent or its
Subsidiary which owns the equity interest in the Subsidiary making such
Restricted Payment receives at least its proportionate share thereof (based upon
its relative holding of the equity interests in the Subsidiary making such
Restricted Payment);

 

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(c) the declaration or payment by the Parent of a cash dividend on, or on
account of, any class of Capital Securities of the Parent (including Designated
Preferred Stock) in an aggregate amount not to exceed the Funds Available for
Restricted Payments; provided that immediately prior to such declaration or
payment, an Authorized Officer of the Parent shall have certified in writing to
the Administrative Agent that no Default shall have occurred and be continuing
or would result therefrom;

(d) the payment of any dividends the declaration of which was permitted pursuant
to the immediately preceding clause (b), so long as such payment is made within
60 days of such declaration or on its regularly schedule payment date;

(e) the redemption, purchase or other acquisition by the Parent of its Series B
Preferred Stock and, concurrent with any such redemption, the payment of accrued
dividends thereon in an aggregate amount not to exceed the Funds Available for
Restricted Payments; provided that immediately prior to such redemption,
purchase or other acquisition or payment of accrued dividends, an Authorized
Officer of the Parent shall have certified in writing to the Administrative
Agent that no Default shall have occurred and be continuing or would result
therefrom;

(f) the redemption, purchase or other acquisition of Capital Securities of the
Parent in exchange for, or with the net cash proceeds of, the substantially
concurrent sale (other than to a Subsidiary of the Parent) of Capital Securities
(other than Redeemable Capital Securities and Designated Preferred Stock) of the
Parent; provided that immediately prior to such redemption, purchase or other
acquisition, an Authorized Officer of the Parent shall have certified in writing
to the Administrative Agent that immediately before and after giving effect to
such redemption, purchase or other acquisition no Default shall have occurred
and be continuing or would result therefrom;

(g) the redemption, purchase or other acquisition of Capital Securities pursuant
to the Small Lot Repurchase Program in an aggregate amount not to exceed the
Funds Available for Restricted Payments; provided that immediately prior to such
redemption, purchase or other acquisition, an Authorized Officer of the Parent
shall have certified in writing to the Administrative Agent that immediately
before and after giving effect to such redemption, purchase or other acquisition
no Default shall have occurred and be continuing or would result therefrom; and

(h) the declaration and payment by the Parent of cash dividends on, or on
account of, the Parent’s Series B Preferred Stock, 6.5% Mandatory Convertible
Preferred Stock and 12% Convertible Preferred Stock, provided, that, (a) payment
of such dividend occurs on or prior to January 31, 2010, (b) such payment is
only for accrued and unpaid dividends to such date of payment, and (c) the
Parent only pays such portion of the dividend in cash that is not otherwise
payable with common stock.

SECTION 7.2.7. No Prepayment of Certain Indebtedness. The Parent will not, and
will not permit any of its Subsidiaries to,

 

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(a) make any payment or prepayment of principal of, or premium or interest on,
any Permitted Additional Indebtedness or any Subordinated Debt (or redeem,
retire, purchase, defease or otherwise acquire any Permitted Additional
Indebtedness or any Subordinated Debt) (i) other than the stated, scheduled date
for payment of interest set forth in the applicable Permitted Debt Documents or
Subordinated Debt Documents or the conversion of such Permitted Additional
Indebtedness or such Subordinated Debt to Capital Securities pursuant to its
terms, or (ii) which would violate the terms of this Agreement or the applicable
Permitted Debt Documents or Subordinated Debt Documents;

(b) make any payment with respect to an Earn-out Obligation, other than on (or
after) the stated, scheduled date therefor set forth in the documents evidencing
such Earn-out Obligation and so long as (i) the maximum portion of such payment
that can be satisfied with the payment of Capital Securities (other than
Redeemable Capital Securities) of the Parent shall be so satisfied and (ii) with
respect to any such payment (or portion thereof) that cannot be so satisfied,
(A) such payment is made following the receipt by the Administrative Agent of
the financial statements described in clause (b) of Section 7.1.1 (and the
Compliance Certificate relating thereto) with respect to the Fiscal Year
immediately preceding the Fiscal Year in which such payment is to be made, and
(B) prior to such payment, an Authorized Officer of the Parent shall have
certified in writing to the Administrative Agent that no Default shall have
occurred and be continuing or would result therefrom; or

(c) make any deposit (including the payment of amounts into a sinking fund or
other similar fund) for any of the foregoing purposes;

provided that the Parent and its Subsidiaries may pay or prepay the principal
of, or premium or interest on, any Permitted Additional Indebtedness or
Subordinated Debt, or redeem, retire, purchase, defease or otherwise acquire
such Indebtedness, in exchange for, or with the net cash proceeds of,
(x) Indebtedness incurred pursuant to a Refinancing of such Indebtedness or
(y) the substantially concurrent sale (other than to a Subsidiary of the Parent)
of Capital Securities (other than Redeemable Capital Securities and Designated
Preferred Stock) of the Parent, so long as immediately before and after giving
effect to such payment, prepayment, redemption, retirement, purchase, defeasance
or other acquisition no Default shall have occurred and be continuing or would
result therefrom.

SECTION 7.2.8. Issuance of Capital Securities. The Parent will not, and will not
permit any of its Material Subsidiaries to, issue any Capital Securities
(whether for value or otherwise) to any Person other than (a) in the case of
Material Subsidiaries (other than the Greens Creek Group), Capital Securities
(other than Redeemable Capital Securities, unless otherwise permitted by
Section 7.2.2) issued to the Parent or a Subsidiary Guarantor, (b) in the case
of members of the Greens Creek Group, to any Person that held Capital Securities
of a Person in the Greens Creek Group on the Effective Date (provided that no
member of the Greens Creek Group will issue shares to Hecla Limited other than
Hecla Alaska) or (c) in the case of the Parent, Capital Securities (other than
Redeemable Capital Securities, unless otherwise permitted by Section 7.2.2)
issued to any Person that does not result in a Change in Control.

SECTION 7.2.9. Consolidation, Merger, etc. The Parent will not, and will not
permit any Subsidiary to, merge, dissolve, liquidate, consolidate with or into
another Person, except

 

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that, so long as no Default exists or would result therefrom (a) any Subsidiary
(other than the Subsidiary Guarantors and the Borrowers) may liquidate,
dissolve, or dissolve voluntarily into, and may merge with and into, the Parent
or any other U.S. Subsidiary (other than the Borrowers and Hecla Admiralty),
(b) any Foreign Subsidiary (including each Subsidiary listed on Item 7.2.9 of
the Disclosure Schedule as of the Effective Date to the extent each such
Subsidiary is not a Material Subsidiary at such time) may liquidate, dissolve,
or dissolve voluntarily into, and may merge with or into, any other Subsidiary
(other than the Borrowers and Hecla Admiralty), (c) any Subsidiary Guarantor may
merge with and into the Parent or any other Subsidiary Guarantor and (d) the
assets or Capital Securities of any Subsidiary (other than the Subsidiary
Guarantors and the Borrowers) may be purchased or otherwise acquired by the
Parent or any other Subsidiary (other than the Borrowers and Hecla Admiralty)
and the Capital Securities or assets of any Subsidiary Guarantor may be
purchased or otherwise acquired by the Parent or any other Subsidiary Guarantor;
provided that (A) no Default has occurred and is continuing or would occur after
giving effect thereto, (B) such transaction will not affect the Borrowers’
ability to repay the Loans and interest thereon when due, (C) such transaction
will not adversely affect (as determined by each Lender in its sole discretion)
the security interest granted under the Loan Documents in favor of the Secured
Parties and (D) following such transaction, the Parent will promptly deliver to
the Administrative Agent an update of Item 6.8 of the Disclosure Schedule
reflecting the new corporate structure of the Parent and its Subsidiaries.

SECTION 7.2.10. Permitted Dispositions. The Parent will not, and will not permit
any of its Subsidiaries to, Dispose of any of the Parent’s or such Subsidiaries’
assets to any Person in one transaction or series of transactions unless such
Disposition is (a) inventory or obsolete, damaged, worn out or surplus property
Disposed of in the ordinary course of its business, (b) pursuant to
Section 7.2.17, (c) permitted by clauses (f) and (h) (but only with respect to
the San Juan Silver Mining Joint Venture) of Section 7.2.5 or Section 7.2.9,
(d) publicly-traded securities Disposed for fair market value or (e) (i) such
Disposition is for fair market value and (ii) the Net Disposition Proceeds
received from such Disposition, together with the Net Disposition Proceeds of
all other assets Disposed of pursuant to this clause does not exceed
(individually, in the aggregate or when aggregated with all Dispositions
described in Section 7.2.17) $10,000,000 per year; provided, however, that,
neither the Parent nor any Subsidiary may Dispose of its interests in (x) the
Greens Creek Joint Venture Agreement, (y) the assets of any of the Greens Creek
Joint Venture, the Greens Creek Mine or the Lucky Friday Mine (including its
rights to receive income, distributions, products or proceeds therefrom), except
with respect to inventory and obsolete, damaged, immaterial, worn out or surplus
property Disposed of, in each case, in the ordinary course of business or
(z) any member of the Greens Creek Group or Hecla Limited. This Section does not
permit the Disposition of less than 100% of any Capital Securities of any
Subsidiary to any Person other than to the Parent or another Subsidiary, unless
otherwise permitted under Section 7.2.9.

SECTION 7.2.11. Modification of Certain Agreements. The Parent will not, and
will not permit any of its Subsidiaries to, consent to any amendment,
supplement, waiver or other modification of, or enter into any forbearance from
exercising any rights with respect to the terms or provisions contained in,

(a) the Permitted Debt Documents, other than any amendment, supplement, waiver
or modification for which no fee is payable to the holders of the Permitted
Additional Indebtedness

 

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and which (i) extends the date or reduces the amount of any required repayment,
prepayment or redemption of the principal of such Permitted Additional
Indebtedness, (ii) reduces the rate or extends the date for payment of the
interest, premium (if any) or fees payable on such Permitted Additional
Indebtedness or (iii) makes the covenants, events of default or remedies in such
Permitted Debt Documents less restrictive on the Parent and its Subsidiaries;

(b) the Subordinated Debt Documents, other than any amendment, supplement,
waiver or modification for which no fee is payable to the holders of the
Subordinated Debt and which (i) extends the date or reduces the amount of any
required repayment, prepayment or redemption of the principal of such
Subordinated Debt, (ii) reduces the rate or extends the date for payment of the
interest, premium (if any) or fees payable on such Subordinated Debt or
(iii) makes the covenants, events of default or remedies in such Subordinated
Debt Documents less restrictive on the Parent and its Subsidiaries;

(c) the Designated Preferred Stock Documents, other than any amendment,
supplement, waiver or modification for which no fee is payable to the holders of
the Designated Preferred Stock and which (i) extends the date or reduces the
amount of any required redemption of such Designated Preferred Stock,
(ii) reduces the rate or extends the date for payment of dividends, premium (if
any) or fees payable on such Designated Preferred Stock or (iii) makes the
covenants, redemption provisions or remedies in such Designated Preferred Stock
Documents less restrictive on the Parent;

(d) any documents with respect to Earn-out Obligations, which (i) accelerates
the date or increases the amount of any required payment of such Earn-out
Obligation, (ii) modifies any of the subordination terms thereof or (iii) makes
the covenants, events of default or remedies in such documents with respect to
Earn-out Obligations more onerous on the obligors thereunder; or

(e) the Organic Documents of (i) any Obligor, if the result thereof could
reasonably be expected to have an adverse effect on the ability of such Obligor
to, and (ii) any Material Subsidiary of the Parent (other than the Subsidiary
Guarantors or the Borrowers), if the result thereof could reasonably be expected
to have a Material Adverse Effect on the ability of such Subsidiary to, in each
case, comply with or satisfy its obligations hereunder or on the rights or
remedies of any Secured Party.

SECTION 7.2.12. Transactions with Affiliates. The Parent will not, and will not
permit any of its Subsidiaries to, enter into or cause or permit to exist any
arrangement, transaction or contract (including for the purchase, sale, lease or
exchange of property or the rendering of services) with any of its other
Affiliates, unless such arrangement, transaction or contract is on fair and
reasonable terms no less favorable to the Parent or such Subsidiary than it
could obtain in an arm’s-length transaction with a Person that is not an
Affiliate; provided that the Parent, the Borrowers and Subsidiary Guarantors may
enter into any arrangement, transaction or contract with any of the Parent, the
Borrowers or other Subsidiary Guarantors that is not prohibited by this
Agreement and the Borrowers may be party to the Greens Creek Joint Venture
Agreement.

SECTION 7.2.13. Restrictive Agreements, etc. The Parent will not, and will not
permit any of its Subsidiaries to, enter into any agreement prohibiting:

(a) the creation or assumption of any Lien securing the Obligations upon its
properties, revenues or assets, whether now owned or hereafter acquired;

 

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(b) the ability of any Obligor to amend or otherwise modify any Loan Document;
or

(c) the ability of any Subsidiary to make any payments, directly or indirectly,
to the Parent or any Borrower, including by way of dividends, advances,
repayments of loans, reimbursements of management and other intercompany
charges, expenses and accruals or other returns on investments.

The foregoing prohibitions shall not apply to restrictions contained (i) in any
Loan Document, (ii) in the case of clause (a), any agreement governing (A) any
secured Indebtedness permitted by clause (c) of Section 7.2.2 as to the cash and
Cash Equivalent Investments securing such Indebtedness and (B) any Indebtedness
permitted by clause (d) of Section 7.2.2 as to the assets financed with the
proceeds of such Indebtedness, (iii) in the case of clauses (a) and (c), any
agreement of a Subsidiary (other than a Borrower) governing Indebtedness
permitted by Section 7.2.2 (provided that such restrictions are ordinary and
customary with respect to the type of Indebtedness being incurred and would not
reasonably be expected to adversely affect any Obligor’s ability to make
payments hereunder or under any of the other Loan Documents).

SECTION 7.2.14. Hedging Agreements. The Parent will not (a) permit any
Subsidiary to enter into any Hedging Agreement or incur or suffer to exist any
Hedging Obligations (other than a special purpose Subsidiary that enters into
the Gold Participation Bonds) and (b) enter into or be subject to any agreement
or arrangement relating to gold, silver or any other metal which creates an
obligation, whether matured or contingent, of the Parent to deliver (or that
could be called for delivery or cash settlement) in any Fiscal Quarter, when
taken together with all other such obligations of the Parent (including the Gold
Participation Bonds), more than 70% of the forecast payable production of the
Parent and its Subsidiaries of any such metal for such Fiscal Quarter (as set
forth in the Hecla Mine Plan most recently delivered under clause (l) of
Section 7.1.1). Neither the Parent, its Subsidiaries nor any Borrower will enter
into or be subject to any Hedging Agreement (a) which is margined or cash
collateralized, (b) with respect to which the obligations of such Obligor are
secured by a Lien (other than a Lien in favor of a Lender or an Affiliate of a
Lender securing Hedging Obligations) on the property, revenues or assets of the
Obligor, (c) with a counterparty (other than a Lender or an Affiliate of a
Lender) with a credit rating of lower than A2 from Moody’s, lower than A from
S&P or lower than A from Fitch or that has a combined capital and surplus of
less than $250,000,000, or (d) for speculative purposes.

SECTION 7.2.15. Restrictions on the Greens Creek Group. Notwithstanding anything
contained herein to the contrary, no member of the Greens Creek Group shall
engage in any business activity other than in connection with the owning and
holding of the Greens Creek Joint Venture (including the assets and properties
related thereto) and those activities reasonably incidental thereto, including
complying with the terms of the Greens Creek Joint Venture Agreement. In
furtherance of, and not in limitation of the foregoing, no member of the Greens
Creek Group shall:

(a) own any material assets, except for its interests in the Greens Creek Joint
Venture (including (i) its ownership interests in the Greens Creek Joint
Venture, (ii) its rights to receive income, distributions, products and proceeds
from the Greens Creek Joint Venture and (iii) its share in the assets and
properties of the Greens Creek Joint Venture);

 

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(b) create, incur, assume or suffer to exist or otherwise become or be liable in
respect of any Indebtedness or other liabilities or obligations except for
(i) the obligations under the Loan Documents, (ii) its share of Indebtedness or
other liabilities or obligations of the Greens Creek Joint Venture and
(iii) Indebtedness permitted under clauses (c), (d), and (n) of Section 7.2.2;
provided that any Indebtedness permitted under clause (iii) shall be limited to
Indebtedness incurred by the Borrowers to finance the operations of the Greens
Creek Mine ;

(c) create, incur or permit to exist any Lien (other than the Liens created
pursuant to the Loan Documents or Liens permitted under clauses (c), (d), (f),
(g), (h), (i) or (j) of Section 7.2.3); provided that any Liens permitted under
this clause (c) shall be limited to Liens with respect to the Greens Creek Mine;

(d) make, incur, assume or suffer to exist any Investment (other than
Investments in the Greens Creek Joint Venture, its share of Investments made by
the Greens Creek Joint Venture, and Investments permitted under clauses (b),
(d), and (g) of Section 7.2.5); provided that any Investments permitted under
this clause (d) shall be limited to Capital Expenditures made by the Borrowers
in connection with the operations of the Greens Creek Mine;

(e) make or commit to make any Capital Expenditure or enter into any arrangement
which would give rise to any capitalized lease liability (other than Capital
Expenditures, or capitalized leases made or incurred in connection with the
Greens Creek Joint Venture);

(f) enter into any arrangement which involves the leasing by the Borrowers from
any lessor of any real or personal property (or any interest therein) (other
than its interests in of any such arrangement entered into by the Greens Creek
Joint Venture);

(g) sell, transfer, lease or otherwise dispose of, or grant to any Person
options, warrants or other rights with respect to, any of its assets (other than
its interests in any such sale, transfer, lease, grant or other disposition
consummated by the Greens Creek Joint Venture);

(h) enter into any transaction of merger, consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution); or

(i) permit or suffer to exist any Default described in Section 8.1.9 with
respect to the Borrowers.

SECTION 7.2.16. Change to Fiscal Year. The Parent will not change its Fiscal
Year.

SECTION 7.2.17. Sale and Leaseback. The Parent will not, nor will the Parent
permit any of its Subsidiaries to, directly or indirectly enter into any
agreement or arrangement providing for the sale or transfer by it of any
property (now owned or hereafter acquired) to a Person and the subsequent lease
or rental of such property or other similar property from such Person to the
extent the Dispositions related to any such transaction exceed (individually, in
the

 

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aggregate or when aggregated with all Dispositions described in clause (e) of
Section 7.2.10) $10,000,000 per year; provided, however, that, neither the
Parent nor any Subsidiary may engage in any sale and leaseback transaction
involving its interests in (x) the Greens Creek Joint Venture Agreement, (y) the
assets of any of the Greens Creek Joint Venture or the Greens Creek Mine
(including its rights to receive income, distributions, products or proceeds
therefrom) except with respect to inventory and obsolete, damaged, immaterial,
worn out or surplus property transferred in the ordinary course of business or
(z) any member of the Greens Creek Group.

ARTICLE VIII

EVENTS OF DEFAULT

SECTION 8.1. Listing of Events of Default. Each of the following events or
occurrences described in this Article shall constitute an “Event of Default”.

SECTION 8.1.1. Non-Payment of Obligations. The Borrowers or any other Obligor
shall default in the payment or prepayment when due of

(a) any principal of any Loan; or

(b) any interest on any Loans or any fee described in Article III or any other
monetary Obligation, and such default shall continue unremedied for a period of
three Business Days after such amount was due.

SECTION 8.1.2. Breach of Warranty. Any representation or warranty of any Obligor
made or deemed to be made in any Loan Document (including any certificates
delivered pursuant to Article V) is or shall be incorrect when made or deemed to
have been made in any material respect.

SECTION 8.1.3. Non-Performance of Certain Covenants and Obligations.

(a) Any Obligor shall default in the due performance or observance of any of its
obligations under Section 2.4, clauses (d), (e), (f), (h), (j), (k), (l), (m),
(n) and (p) of Section 7.1.1, Section 7.1.6, Section 7.1.7, Section 7.1.8,
Section 7.1.9, Section 7.1.10, Section 7.1.12, Section 7.1.13, Section 7.1.14,
Section 7.1.16 or Section 7.2 or any Obligor shall default in the due
performance or observance of its obligations under (i) Articles II and IV of the
Subsidiary Guaranty or (ii) Article IV of a Security Agreement, taking into
account any grace periods provided in such Subsidiary Guaranty or Security
Agreement.

(b) The Parent shall default in the due performance or observance of any of its
obligations under (i) clauses (a), (b), (c), (g), (i) and (o) of Section 7.1.1
and such default shall continue unremedied for a period of 10 days or
(ii) Articles II and IV of the Parent Guaranty, taking into account any grace
periods provided in such Parent Guaranty.

SECTION 8.1.4. Non-Performance of Other Covenants and Obligations. Any Obligor
shall default in the due performance and observance of any other agreement
contained in any Loan Document executed by it, and such default shall continue
unremedied for a period of 30 days after the earlier to occur of (i) notice
thereof given to the Parent by the Administrative Agent or any Lender or
(ii) the date on which an officer of any Obligor has knowledge of such default.

 

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SECTION 8.1.5. Default on Other Indebtedness.

(a) A default shall occur in the payment of any amount when due (subject to any
applicable grace period), whether by acceleration or otherwise, of any principal
or stated amount of, or interest or fees (or similar payments) on, any
Indebtedness (other than Indebtedness described in Section 8.1.1 or under a
Hedging Agreement) of the Parent or any of its Material Subsidiaries having a
principal or stated amount, individually or in the aggregate, in excess of
$5,000,000 and any Permitted Additional Indebtedness or Subordinated Debt of the
Parent or any of its Material Subsidiaries, or a default shall occur in the
performance or observance of any obligation or condition with respect to such
Indebtedness if the effect of such default is to accelerate the maturity of any
such Indebtedness or such default shall continue unremedied for any applicable
period of time sufficient to permit the holder or holders of such Indebtedness,
or any trustee or agent for such holders, to cause or declare such Indebtedness
to become due and payable or to require such Indebtedness to be prepaid,
redeemed, purchased or defeased, or require an offer to purchase or defease such
Indebtedness to be made, prior to its expressed maturity; or

(b) an early termination event occurs under any Hedging Agreement resulting from
(x) any default as to which the Parent or a Subsidiary is the defaulting party
or (y) any termination event (other than, with respect to the Gold Participation
Bond, as a result of a voluntary prepayment in full) under such Hedging
Agreement as to which the Parent or a Subsidiary is an affected party and, in
either event, the termination value of such Hedging Agreement owed by the Parent
or such Subsidiary as a result thereof is greater than $5,000,000.

SECTION 8.1.6. Judgments. Any judgment or order for the payment of money
individually or in the aggregate in excess of $5,000,000 (exclusive of any
amounts fully covered by independent third-party insurance (less any applicable
deductible) as to which the insurer has been notified of the potential claim and
does not dispute coverage) shall be rendered against the Parent, any of its
Material Subsidiaries or the Greens Creek Joint Venture and such judgment shall
not have been vacated or discharged or stayed or bonded pending appeal within 60
days after the entry thereof or enforcement proceedings shall have been
commenced by any creditor upon such judgment or order.

SECTION 8.1.7. Pension Plans. Any of the following events shall occur with
respect to any Pension Plan

(a) the institution of any steps by the Parent, any member of its Controlled
Group or any other Person to terminate a Pension Plan if, as a result of such
termination, the Parent or any such member could be required to make a
contribution to such Pension Plan, or could reasonably expect to incur a
liability or obligation to such Pension Plan, in excess of $5,000,000; or

(b) a contribution failure occurs with respect to any Pension Plan sufficient to
give rise to a Lien under Section 303(k) of ERISA.

SECTION 8.1.8. Change in Control. Any Change in Control shall occur.

 

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SECTION 8.1.9. Bankruptcy, Insolvency, etc. The Parent or any of its Material
Subsidiaries shall

(a) become insolvent or generally fail to pay, or admit in writing its inability
or unwillingness generally to pay, debts as they become due;

(b) apply for, consent to, or acquiesce in the appointment of a trustee,
receiver, sequestrator or other custodian for any substantial part of the
property of any thereof, or make a general assignment for the benefit of
creditors;

(c) in the absence of such application, consent or acquiescence in or permit or
suffer to exist the appointment of a trustee, receiver, sequestrator or other
custodian for a substantial part of the property of any thereof, and such
trustee, receiver, sequestrator or other custodian shall not be discharged
within 60 days; provided that, the Parent, each Material Subsidiary and each
other Obligor hereby expressly authorizes each Secured Party to appear in any
court conducting any relevant proceeding during such 60-day period to preserve,
protect and defend their rights under the Loan Documents;

(d) permit or suffer to exist the commencement of any bankruptcy,
reorganization, debt arrangement or other case or proceeding under any
bankruptcy or insolvency law or any dissolution, winding up or liquidation
proceeding, in respect thereof, and, if any such case or proceeding is not
commenced by the Parent, any Material Subsidiary or any Obligor, such case or
proceeding shall be consented to or acquiesced in by the Parent, such Material
Subsidiary or such Obligor, as the case may be, or shall result in the entry of
an order for relief or shall remain for 60 days undismissed; provided that, the
Parent, each Subsidiary and each Obligor hereby expressly authorizes each
Secured Party to appear in any court conducting any such case or proceeding
during such 60-day period to preserve, protect and defend their rights under the
Loan Documents; or

(e) take any action authorizing, or in furtherance of, any of the foregoing.

SECTION 8.1.10. Impairment of Security, etc. Any Loan Document or any Lien
granted thereunder shall (except in accordance with its terms), in whole or in
part, terminate, fail to be effective or fail to be the legally valid, binding
and enforceable obligation of any Obligor party thereto; any Obligor shall
directly contest in any manner the validity, binding nature or enforceability of
any material provision of any Loan Document; or, except as permitted under any
Loan Document, any Lien securing any Obligation shall, in whole or in part, fail
to be a perfected first priority Lien.

SECTION 8.1.11. Failure of Subordination. Unless otherwise waived or consented
to by the Administrative Agent and the Lenders in writing,

(a) the payment postponement and subordination provisions relating to any
Subordinated Debt (its “Subordination Provisions”) shall fail to be enforceable
by the Administrative Agent and the Lenders in accordance with the terms
thereof,

(b) the monetary Obligations shall fail to constitute “Senior Indebtedness” (or
analogous term) referring to the Obligations, or

 

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(c) the Parent or any of its Subsidiaries shall, directly or indirectly, disavow
or contest in any manner (x) the effectiveness, validity or enforceability of
any Subordination Provision, (y) that the Subordination Provisions exist for the
benefit of the Administrative Agent and the Lenders or (z) that all payments of
principal of or premium and interest on the Subordinated Debt, or realized from
the liquidation of any property of any Obligor, shall be subject to any of such
Subordination Provisions.

SECTION 8.1.12. Abandonment of Greens Creek Mine or Lucky Friday Mine. Operation
of the principal operating properties of the Greens Creek Mine or the Lucky
Friday Mine shall be abandoned or terminated.

SECTION 8.1.13. Regulatory Action. Any Governmental Authority shall take any
action with respect to any mine owned or operated by Parent or its Subsidiaries,
the operation thereof or the sale of the production therefrom (including any
action that would cause any license, permit, consent or other Mining Right to
cease to be in full force and effect or to be held to be illegal or invalid and
including any action (including the commencement of an action or proceeding)
that results or may result in the revocation, termination or substantial and
adverse modification of any such license, permit, consent or other Mining Right)
which could reasonably be expected to have a Material Adverse Effect, unless
such action is set aside, dismissed or withdrawn within 60 days of its
institution or such action is being contested in good faith and its effect is
stayed during such contest.

SECTION 8.1.14. Material Adverse Change. The occurrence of a Material Adverse
Change.

SECTION 8.1.15. Greens Creek. The Greens Creek Manager shall be a Person other
than a member of the Greens Creek Group or the Greens Creek Joint Venture
Agreement shall fail to be effective or fail to be the legally valid, binding
and enforceable obligation of the Borrowers.

SECTION 8.2. Action if Bankruptcy. If any Event of Default described in clauses
(a) through (d) of Section 8.1.9 with respect to any Obligor shall occur, the
Commitments (if not theretofore terminated) shall automatically terminate and
the outstanding principal amount of all outstanding Loans and all other
Obligations shall automatically be and become immediately due and payable,
without notice or demand to any Person.

SECTION 8.3. Action if Other Event of Default. If any Event of Default (other
than any Event of Default described in clauses (a) through (d) of Section 8.1.9
with respect to any Obligor) shall occur for any reason, whether voluntary or
involuntary, and be continuing, the Administrative Agent, upon the direction of
the Required Lenders, shall by notice to the Borrowers declare all or any
portion of the outstanding principal amount of the Loans and other Obligations
to be due and payable, whereupon the full unpaid amount of such Loans and other
Obligations which shall be so declared due and payable shall be and become
immediately due and payable, without further notice, demand or presentment,
and/or, as the case may be, the Commitments shall terminate. Notwithstanding
anything to the contrary contained herein or in any other Loan Document, the
authority to enforce rights and remedies hereunder and under the other Loan
Documents shall be vested exclusively in, and all actions and proceedings at law
in

 

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connection with such enforcement shall be instituted and maintained exclusively
by, the Administrative Agent in accordance with this Section and Section 8.2 for
the benefit of all the Lenders; provided, however, that the foregoing shall not
prohibit any Lender from exercising setoff rights in accordance with
Section 4.9.

ARTICLE IX

THE ADMINISTRATIVE AGENT

SECTION 9.1. Appointments; Actions. Each Lender hereby appoints Scotiabank as
its Administrative Agent under and for purposes of each Loan Document. Each
Lender authorizes the Administrative Agent to act on behalf of such Lender under
each Loan Document and, in the absence of other written instructions from the
Required Lenders received from time to time by the Administrative Agent (with
respect to which the Administrative Agent agrees that it will comply, except as
otherwise provided in this Section or as otherwise advised by counsel in order
to avoid contravention of Applicable Law), to exercise such powers hereunder and
thereunder as are specifically delegated to or required of the Administrative
Agent by the terms hereof and thereof, together with such powers as may be
incidental thereto (including the release of Liens on assets Disposed of in
accordance with the terms of the Loan Documents). Each Lender hereby indemnifies
(which indemnity shall survive any termination of this Agreement) the
Administrative Agent, pro rata according to such Lender’s proportionate Total
Exposure Amount, from and against any and all liabilities, obligations, losses,
damages, claims, costs or expenses of any kind or nature whatsoever which may at
any time be imposed on, incurred by, or asserted against, the Administrative
Agent in any way relating to or arising out of any Loan Document, (including
attorneys’ fees), and as to which the Administrative Agent is not reimbursed by
the Borrowers; provided that, no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, claims, costs or
expenses which are determined by a court of competent jurisdiction in a final
proceeding to have resulted from the Administrative Agent’s gross negligence or
willful misconduct. The Administrative Agent shall not be required to take any
action under any Loan Document, or to prosecute or defend any suit in respect of
any Loan Document, unless it is indemnified hereunder to its satisfaction. If
any indemnity in favor of the Administrative Agent shall be or become, in the
Administrative Agent’s determination, inadequate, the Administrative Agent may
call for additional indemnification from the Lenders and cease to do the acts
indemnified against hereunder until such additional indemnity is given.

SECTION 9.2. Funding Reliance, etc. Unless the Administrative Agent shall have
been notified in writing by any Lender by 3:00 p.m. on the Business Day prior to
a Borrowing that such Lender will not make available the amount which would
constitute its Percentage of such Borrowing on the date specified therefor, the
Administrative Agent may assume that such Lender has made such amount available
to the Administrative Agent and, in reliance upon such assumption, make
available to the Borrowers a corresponding amount. If and to the extent that
such Lender shall not have made such amount available to the Administrative
Agent, such Lender and the Borrowers severally agree to repay the Administrative
Agent forthwith on demand such corresponding amount together with interest
thereon, for each day from the date the Administrative Agent made such amount
available to the Borrowers to the date such amount is repaid to the
Administrative Agent, at an interest rate equal to (x) in the case of the
Borrowers, the interest rate applicable at the time to Loans comprising such
Borrowing and (y) in the case of

 

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a Lender, at the Federal Funds Rate (for the first two Business Days after which
such amount has not been repaid), and thereafter at the interest rate applicable
to Loans comprising such Borrowing.

SECTION 9.3. Exculpation. Neither the Administrative Agent or any of its
directors, officers, employees or agents shall be liable to any Secured Party
for any action taken or omitted to be taken by it under any Loan Document, or in
connection therewith, except for its own willful misconduct or gross negligence,
nor responsible for any recitals or warranties herein or therein, nor for the
effectiveness, enforceability, validity or due execution of any Loan Document,
nor for the creation, perfection or priority of any Liens purported to be
created by any of the Loan Documents, or the validity, genuineness,
enforceability, existence, value or sufficiency of any collateral security, nor
to make any inquiry respecting the performance by any Obligor of its
Obligations. Any such inquiry which may be made by either Agent shall not
obligate it to make any further inquiry or to take any action. The
Administrative Agent shall be entitled to rely upon advice of counsel concerning
legal matters and upon any notice, consent, certificate, statement or writing
which the Administrative Agent believes to be genuine and to have been presented
by a proper Person.

SECTION 9.4. Successor. The Administrative Agent may resign as such at any time
upon at least 30 days’ prior notice to the Borrowers and all Lenders. If the
Administrative Agent at any time shall resign, the Required Lenders may appoint
another Lender as a successor Administrative Agent which shall thereupon become
the Administrative Agent hereunder. If no successor Administrative Agent shall
have been so appointed by the Required Lenders, or shall have accepted such
appointment, within 30 days after the retiring Administrative Agent’s giving
notice of resignation, then, the retiring Administrative Agent may, on behalf of
the Lenders, appoint a successor Administrative Agent, which shall be one of the
Lenders or a commercial banking institution organized under the laws of the
United States (or any State thereof) or a United States branch or agency of a
commercial banking institution, and having a combined capital and surplus of at
least $250,000,000; provided, however, that if such retiring Administrative
Agent is unable to find a commercial banking institution which is willing to
accept such appointment and which meets the qualifications set forth in above,
the retiring Administrative Agent’s resignation shall nevertheless thereupon
become effective and the Lenders shall assume and perform all of the duties of
the Administrative Agent hereunder until such time, if any, as the Required
Lenders appoint a successor as provided for above. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall be entitled to receive from the
retiring Administrative Agent such documents of transfer and assignment as such
successor Administrative Agent may reasonably request, and shall thereupon
succeed to and become vested with all rights, powers, privileges and duties of
the retiring Administrative Agent, and the retiring Administrative Agent shall
be discharged from its duties and obligations under the Loan Documents. After
any retiring Administrative Agent’s resignation hereunder as the Administrative
Agent, the provisions of this Article shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was the Administrative Agent
under the Loan Documents, and Sections 10.3 and 10.4 shall continue to inure to
its benefit.

SECTION 9.5. Loans by Scotiabank. Scotiabank shall have the same rights and
powers with respect to (x) the Credit Extensions made by it or any of its
Affiliates, and (y) the Note held

 

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by it or any of its Affiliates as any other Lender and may exercise the same as
if it were not the Administrative Agent hereunder. The Administrative Agent and
each of its respective Affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with the Parent or any Subsidiary or
Affiliate of the Parent as if the Administrative Agent was not the
Administrative Agent.

SECTION 9.6. Credit Decisions. Each Lender acknowledges that it has,
independently of the Administrative Agent and each other Lender, and based on
such Lender’s review of the financial information of the Parent, each Borrower,
the Loan Documents (the terms and provisions of which being satisfactory to such
Lender) and such other documents, information and investigations as such Lender
has deemed appropriate, made its own credit decision to extend its Commitments.
Each Lender also acknowledges that it will, independently of the Administrative
Agent and each other Lender, and based on such other documents, information and
investigations as it shall deem appropriate at any time, continue to make its
own credit decisions as to exercising or not exercising from time to time any
rights and privileges available to it under the Loan Documents.

SECTION 9.7. Copies, etc. The Administrative Agent shall give prompt notice to
each Lender of each notice or request required or permitted to be given to the
Administrative Agent by the Parent or the Borrowers pursuant to the terms of the
Loan Documents (unless concurrently delivered to the Lenders by the Parent or
the Borrowers). The Administrative Agent will distribute to each Lender each
document or instrument received for its account and copies of all other
communications received by the Administrative Agent from the Parent or any
Borrower for distribution to the Lenders by the Administrative Agent in
accordance with the terms of the Loan Documents.

SECTION 9.8. Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely upon any certification, notice or other communication
(including any thereof by telephone, facsimile, electronic mail, Internet and
intranet websites) believed by it to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person, and upon advice and
statements of legal counsel, independent accountants and other experts selected
by the Administrative Agent. As to any matters not expressly provided for by the
Loan Documents, the Administrative Agent shall in all cases be fully protected
in acting, or in refraining from acting, thereunder in accordance with
instructions given by the Required Lenders or all of the Lenders as is required
in such circumstance, and such instructions of such Lenders and any action taken
or failure to act pursuant thereto shall be binding on all Secured Parties. For
purposes of applying amounts in accordance with this Section, the Administrative
Agent shall be entitled to rely upon any Secured Party that has entered into a
Lender Hedging Agreement with any Obligor for a determination (which such
Secured Party agrees to provide or cause to be provided upon request of the
Administrative Agent) of the outstanding Obligations owed to such Secured Party
under any Lender Hedging Agreement. Unless it has actual knowledge evidenced by
way of written notice from any such Secured Party and the Parent to the
contrary, the Administrative Agent, in acting in such capacity under the Loan
Documents, shall be entitled to assume that no Lender Hedging Agreements or
Obligations in respect thereof are in existence or outstanding between any
Secured Party and any Obligor.

 

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SECTION 9.9. Defaults. The Administrative Agent shall be deemed not to have
knowledge or notice of the occurrence of a Default unless the Administrative
Agent has received a written notice from a Lender, the Parent or a Borrower
specifying such Default and stating that such notice is a “Notice of Default”.
In the event that the Administrative Agent receives such a notice of the
occurrence of a Default, the Administrative Agent shall give prompt notice
thereof to the Lenders. The Administrative Agent shall (subject to Section 10.1)
take such action with respect to such Default as shall be directed by the
Required Lenders; provided that, unless and until the Administrative Agent shall
have received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default as it shall deem advisable in the best interest of the Secured
Parties except to the extent that this Agreement expressly requires that such
action be taken, or not be taken, only with the consent or upon the
authorization of the Required Lenders or all Lenders.

SECTION 9.10. Appointment of Supplemental Agents, Sub-Agents; etc.

(a) In the event the Administrative Agent reasonably deems it necessary to
comply with Applicable Law or, with the consent of the Borrowers (such consent
not to be unreasonably withheld or delayed), desirable, it may, in respect of
the collateral securing the Obligations, appoint an additional individual or
institution as a separate trustee, co-trustee, collateral agent or collateral
co-agent (any such additional individual or institution being referred to herein
individually as a “Supplemental Agent” and collectively as “Supplemental
Agents”). Such Supplemental Agent or Supplemental Agents shall have, in respect
of the collateral securing the Obligations, each and every right, power,
privilege or duty expressed or intended by this Agreement or any of the other
Loan Documents to be exercised by or vested in or conveyed to the Administrative
Agent with respect to such collateral, to the extent necessary to enable such
Supplemental Agent to exercise such rights, powers and privileges with respect
to such collateral and to perform such duties with respect to such collateral.

(b) Without limiting the provisions of the foregoing clause (a), the
Administrative Agent may perform any and all of its duties and exercise its
rights and powers hereunder or under any other Loan Document by or through any
one or more sub-agents appointed by such Administrative Agent. The
Administrative Agent and any such sub-agent may perform any and all of its
duties and exercise its rights and powers by or through their respective
officers, directors, employees and agents.

(c) Should any instrument in writing from any Obligor be required by any
Supplemental Agent or sub-agent so appointed by the Administrative Agent to more
fully and certainly vest in and confirm to him or it such rights, powers,
privileges and duties, the Parent shall, or shall cause such Obligor to,
execute, acknowledge and deliver any and all such instruments promptly upon
request by the Administrative Agent. In case any Supplemental Agent or
sub-agent, or a successor thereto, shall die, become incapable of acting, resign
or be removed, all the rights, powers, privileges and duties of such
Supplemental Agent or sub-agent, to the extent permitted by law, shall vest in
and be exercised by the Administrative Agent until the appointment of a new
Supplemental Agent or sub-agent. The provisions of Sections 9.1, 9.3 and 10.4
that refer to the Administrative Agent shall inure to the benefit of each
Supplemental Agent and each sub-agent and all references therein to the
Administrative Agent shall be deemed to be references to the Administrative
Agent and/or each Supplemental Agent and/or sub-agent, as the context may
require.

 

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ARTICLE X

MISCELLANEOUS PROVISIONS

SECTION 10.1. Waivers, Amendments, etc. The provisions of each Loan Document may
from time to time be amended, modified or waived, if such amendment,
modification or waiver is in writing and consented to by the Obligor or Obligors
party to such Loan Document and the Required Lenders; provided that, no such
amendment, modification or waiver shall:

(a) modify clause (b) of Section 4.7, Section 4.8 (as it relates to sharing of
payments) or this Section without the consent of all Lenders;

(b) increase the aggregate amount of any Credit Extensions required to be made
by a Lender pursuant to its Commitments, extend the final Commitment Termination
Date of Credit Extensions made (or participated in) by a Lender or extend the
Stated Maturity Date for any Lender’s Loans, in each case without the consent of
such Lender (it being agreed, however, that any vote to rescind any acceleration
made pursuant to Section 8.2 and Section 8.3 of amounts owing with respect to
the Loans and other Obligations shall only require the vote of the Required
Lenders);

(c) reduce the principal amount of or reduce the rate of interest on any
Lender’s Loans, reduce any fees described in Article III payable to any Lender,
waive payment Defaults or extend the scheduled date on which principal, interest
or fees are payable in respect of such Lender’s Loans, in each case without the
consent of such Lender (provided that, the vote of Required Lenders shall be
sufficient to waive the payment, or reduce the increased portion, of interest
accruing under Section 3.2.2);

(d) change (either positive or negative) the percentage set forth in the
definition of “Required Lenders” or modify any requirement hereunder that any
particular action be taken by all Lenders without the consent of all Lenders;

(e) except as otherwise expressly provided in a Loan Document, release (i) the
any Obligor from its Obligations under the Loan Documents to which such Obligor
is a party or (ii) any collateral (unless in connection with a Disposition
permitted under Section 7.2.10) under the Loan Documents, in each case without
the consent of all Lenders; or

(f) affect adversely the interests, rights or obligations of the Administrative
Agent (in its capacity as the Administrative Agent).

No failure or delay on the part of any Secured Party in exercising any power or
right under any Loan Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power or right preclude any other or
further exercise thereof or the exercise of any other power or right. No notice
to or demand on any Obligor in any case shall entitle it to any notice or demand
in similar or other circumstances. No waiver or approval by any Secured Party
under any Loan Document shall, except as may be otherwise stated in such waiver
or approval, be applicable to subsequent transactions. No waiver or approval
hereunder shall require any similar

 

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or dissimilar waiver or approval thereafter to be granted hereunder.
Notwithstanding anything to the contrary herein, no Defaulting Lender shall have
any right to approve or disapprove any amendment, waiver or consent hereunder,
except that the Commitment of such Lender may not be increased or extended
without the consent of such Lender.

Further, notwithstanding anything to the contrary contained in Section 10.1, if
within sixty days following the effective date of any Loan Document, the
Administrative Agent and the Borrowers shall have jointly identified an obvious
error or any error or omission of a technical or immaterial nature, in each
case, in any provision of the Loan Documents, then the Administrative Agent and
the Borrowers shall be permitted to amend such provision and such amendment
shall become effective without any further action or consent of any other party
to any Loan Document if the same is not objected to in writing by the Required
Lenders within five Business Days following receipt of notice thereof.

SECTION 10.2. Notices; Time. All notices and other communications provided under
each Loan Document shall be in writing or by facsimile and addressed, delivered
or transmitted, if to the Parent, a Borrower, the Administrative Agent or a
Lender, to the applicable Person at its address or facsimile number set forth on
Schedule II hereto or set forth in the Lender Assignment Agreement, or at such
other address or facsimile number as may be designated by such party in a notice
to the other parties. Any notice, if mailed and properly addressed with postage
prepaid or if properly addressed and sent by pre-paid courier service, shall be
deemed given when received; any notice, if transmitted by facsimile, shall be
deemed given when the confirmation of transmission thereof is received by the
transmitter. Electronic mail and Internet and intranet websites may be used by
the Administrative Agent and the Lenders to distribute communications to one
another, including consent and waiver approvals, financial statements and other
information as provided in Section 7.1.1 and for the distribution and execution
of Loan Documents for execution by the parties thereto, and may not be used for
any other purpose. Unless otherwise indicated, all references to the time of a
day in a Loan Document shall refer to New York time.

SECTION 10.3. Payment of Costs and Expenses. The Parent and the Borrowers agree
to pay on demand all reasonable expenses of the Administrative Agent and the
Arrangers (including the reasonable fees and out-of-pocket expenses of Mayer
Brown LLP, counsel to the Administrative Agent and of local counsel, if any, who
may be retained by or on behalf of the Administrative Agent) in connection with

(a) the negotiation, preparation, execution and delivery of each Loan Document,
including schedules and exhibits, and any amendments, waivers, consents,
supplements or other modifications to any Loan Document as may from time to time
hereafter be required, whether or not the transactions contemplated hereby or
thereby are consummated; and

(b) the filing or recording of any Loan Document (including the Filing
Statements) and all amendments, supplements, amendment and restatements and
other modifications to any thereof, searches made following the Effective Date
in jurisdictions where Filing Statements (or other documents evidencing Liens in
favor of the Secured Parties) have been recorded and any and all other documents
or instruments of further assurance required to be filed or recorded by the
terms of any Loan Document;

 

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(c) the conduct of due diligence and related matters conducted in connection
with the Loan Documents and the syndication of the Loans; and

(d) the preparation and review of the form of any document or instrument or any
information relevant to any Loan Document.

The Parent and the Borrowers further agree to pay, and to save each Secured
Party harmless from all liability for, any stamp or other taxes or notarial fees
which may be payable in connection with the execution or delivery of each Loan
Document, the Credit Extensions or the issuance of the Notes. The Parent and the
Borrowers also agree to reimburse the Administrative Agent and the Lenders upon
demand for all out-of-pocket expenses (including attorneys’ fees and legal
expenses of counsel to the Administrative Agent and the Lenders) incurred by the
Administrative Agent in connection with (x) the negotiation of any restructuring
or “work-out” with the Parent or a Borrower, whether or not consummated, of any
Obligations and (y) the enforcement of any Obligations.

SECTION 10.4. Indemnification. In consideration of the execution and delivery of
this Agreement by each Secured Party, the Parent and each Borrower hereby
indemnifies, exonerates and holds each Secured Party and each of their
respective officers, partners, trustees, members, shareholders, directors,
employees, agents and Affiliates (collectively, the “Indemnified Parties”) free
and harmless from and against any and all actions, causes of action, suits,
losses, claims, costs, liabilities and damages, and expenses incurred in
connection therewith (irrespective of whether any such Indemnified Party is a
party to the action for which indemnification hereunder is sought), including
attorneys’ fees and disbursements, whether incurred in connection with actions
between or among the parties hereto or the parties hereto and third parties
(collectively, the “Indemnified Liabilities”), incurred by the Indemnified
Parties or any of them as a result of, or arising out of, or relating to:

(a) any transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of any Credit Extension;

(b) the entering into and performance of any Loan Document by any of the
Indemnified Parties (including any action brought by or on behalf of the
Borrowers as the result of any determination by the Required Lenders pursuant to
Article V not to fund any Credit Extension, provided that any such action is
resolved in favor of such Indemnified Party);

(c) any investigation, litigation or proceeding related to any acquisition or
proposed acquisition by any Obligor or any Subsidiary thereof of all or any
portion of the Capital Securities or assets of any Person, whether or not an
Indemnified Party is party thereto;

(d) any investigation, litigation or proceeding related to any environmental
cleanup, audit, compliance or other matter relating to the protection of the
environment or the Release by any Obligor or any Subsidiary thereof of any
Hazardous Material;

(e) the presence on or under, or the escape, seepage, leakage, spillage,
discharge, emission, discharging or releases from, any real property owned or
operated by any Obligor or any Subsidiary thereof of any Hazardous Material
(including any losses, liabilities, damages, injuries, costs, expenses or claims
asserted or arising under any Environmental Law), regardless of whether caused
by, or within the control of, such Obligor or such Subsidiary; or

 

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(f) each Lender’s Environmental Liability (the indemnification in this clause
(f) shall survive repayment of the Obligations and any transfer of the property
of any Obligor or its Subsidiaries by foreclosure or by a deed in lieu of
foreclosure for any Lender’s Environmental Liability, regardless of whether
caused by, or within the control of, such Obligor or such Subsidiary);

except for Indemnified Liabilities arising for the account of a particular
Indemnified Party primarily by reason of the relevant Indemnified Party’s gross
negligence or willful misconduct as finally determined by a court of competent
jurisdiction. Each Obligor and its successors and assigns hereby waive, release
and agree not to make any claim or bring any cost recovery action against, any
Indemnified Party under CERCLA or any state equivalent, or any similar
Applicable Law now existing or hereafter enacted. It is expressly understood and
agreed that to the extent that any Indemnified Party is strictly liable under
any Environmental Laws, each Obligor’s obligation to such Indemnified Party
under this indemnity shall likewise be without regard to fault on the part of
any Obligor relative to the violation or condition which results in liability of
an Indemnified Party. If and to the extent that the foregoing undertaking may be
unenforceable for any reason, each Obligor agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under Applicable Law. To the extent permitted
by Applicable Law, no party to this Agreement shall not assert, and hereby
waives, any claim against any other party to this Agreement on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any other Loan Document, the Credit Extension or the use
of the proceeds thereof.

SECTION 10.5. Survival. The obligations of the Parent and each Borrower under
Sections 4.3, 4.4, 4.5, 4.6, 10.3 and 10.4, and the obligations of the Lenders
under Section 9.1, shall in each case survive any assignment from one Lender to
another (in the case of Sections 10.3 and 10.4) and the occurrence of the
Termination Date. The representations and warranties made by each Obligor in
each Loan Document shall survive the execution and delivery of such Loan
Document.

SECTION 10.6. Severability. Any provision of any Loan Document which is
prohibited or unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of such Loan
Document or affecting the validity or enforceability of such provision in any
other jurisdiction.

SECTION 10.7. Headings. The various headings of each Loan Document are inserted
for convenience only and shall not affect the meaning or interpretation of such
Loan Document or any provisions thereof.

SECTION 10.8. Execution in Counterparts, Effectiveness, etc. This Agreement and
each other Loan Document may be executed by the parties hereto in several
counterparts, each of which shall be an original and all of which shall
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agreement. This Agreement shall become effective when counterparts hereof
executed on behalf of the Borrower, the Administrative Agent and each Lender (or
notice thereof satisfactory to the Administrative Agent), shall have been
received by the Administrative Agent and the conditions set forth in Section 5.1
have been satisfied in full or waived in accordance with Section 10.1. The
parties hereto agree that delivery of an executed counterpart of a signature
page to this Agreement and each other Loan Document by facsimile (or electronic
transmission) shall be effective as delivery of an original executed counterpart
of this Agreement or such other Loan Document.

SECTION 10.9. Governing Law; Entire Agreement. EACH LOAN DOCUMENT WILL EACH BE
DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK). The Loan Documents constitute
the entire understanding among the parties hereto with respect to the subject
matter thereof and supersede any prior agreements, written or oral, with respect
thereto.

SECTION 10.10. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided that, the Parent or any Borrower may not assign or
transfer its rights or obligations hereunder (other than pursuant to
Section 7.2.15) without the consent of all Lenders.

SECTION 10.11. Sale and Transfer of Credit Extensions; Participations in Credit
Extensions; Notes. Each Lender may assign, or sell participations in, its Loans
to one or more other Persons in accordance with the terms set forth below.

(a) Subject to clause (b), any Lender may assign to one or more Eligible
Assignees all or a portion of its rights and obligations under the Loan
Documents (including all or a portion of Loans at the time owing to it);
provided that:

(i) except in the case of (A) an assignment of the entire remaining amount of
the Loans owing to the assigning Lender or (B) an assignment to a Lender, an
Affiliate of a Lender or an Approved Fund with respect to a Lender, the
aggregate principal outstanding balance of the Loans of the assigning Lender
subject to each such assignment (determined as of the date the Lender Assignment
Agreement with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $10,000,000, unless the Administrative Agent and,
so long as no Default has occurred and is continuing, the Borrowers, otherwise
consent (in each case, such consent not to be unreasonably withheld or delayed);

(ii) except in the case of an assignment of the entire remaining amount of the
Loans owing to the assigning Lender, no Lender shall retain less than
$10,000,000 following any assignment;

(iii) each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender’s rights and obligations under this Agreement
with respect to the Loans assigned; and

 

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(iv) the parties to each assignment shall execute and deliver to the
Administrative Agent a Lender Assignment Agreement, together with a processing
and recordation fee of $3,500 and if the Eligible Assignee is not already
Lender, administrative details information with respect to such Eligible
Assignee and applicable tax forms.

(b) Any assignment proposed pursuant to clause (a) to any Eligible Assignee
(other than a Lender, an Affiliate of a Lender or an Approved Fund) shall be
subject to the prior written approval of (i) the Administrative Agent (not to be
unreasonably withheld) and (ii) except in the case of an assignment to a Lender
or an Affiliate of a Lender, so long as no Default has occurred and is
continuing on the date such assignment is to become effective, the Borrowers
(such consent not to be unreasonably withheld or delayed). If the consent of the
Borrowers to an assignment or to an Eligible Assignee is required hereunder
(including a consent to an assignment which does not meet the minimum assignment
thresholds specified in this Section), each Borrower shall be deemed to have
given its consent ten Business Days after the date notice thereof has been
delivered by the assigning Lender (through the Administrative Agent) to the
Borrowers, unless such consent is expressly refused by the Borrowers prior to
such tenth Business Day.

(c) Subject to acceptance and recording thereof by the Administrative Agent
pursuant to clause (d), from and after the effective date specified in each
Lender Assignment Agreement, (i) the Eligible Assignee thereunder shall (if not
already a Lender) be a party hereto and, to the extent of the interest assigned
by such Lender Assignment Agreement, have the rights and obligations of a Lender
under the Loan Documents, and (ii) the assigning Lender thereunder shall
(subject to Section 10.5) be released from its obligations under the Loan
Documents, to the extent of the interest assigned by such Lender Assignment
Agreement (and, in the case of a Lender Assignment Agreement covering all of the
assigning Lender’s rights and obligations under the Loan Documents, such Lender
shall cease to be a party hereto, but shall (as to matters arising prior to the
effectiveness of the Lender Assignment Agreement) continue to be entitled to the
benefits of any provisions of the Loan Documents which by their terms survive
the termination of this Agreement). Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with the terms
of this Section shall be treated for purposes of the Loan Documents as a sale by
such Lender of a participation in such rights and obligations in accordance with
clause (e).

(d) The Administrative Agent shall record each assignment made in accordance
with this Section in the Register pursuant to clause (a) of Section 2.7. The
Register shall be available for inspection by the Borrowers and any Lender, at
any reasonable time upon reasonable prior notice to the Administrative Agent.

(e) Any Lender may, without the consent of, or notice to, any Person, sell
participations to one or more Persons (other than individuals) (a “Participant”)
in all or a portion of such Lender’s rights or obligations under the Loan
Documents (including all or a portion of the Loans owing to it); provided that,
(i) such Lender’s obligations under the Loan Documents shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, (iii) no Participant nor any Lender
transferring a participation shall hold Loans of less than $10,000,000 (free and
clear of participations) after any such

 

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participation is completed and (iv) the Parent, each Borrower, the
Administrative Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under the Loan Documents. Each Lender that sells a participating
interest in any Loans or other interest to a Participant shall, as agent of the
Borrowers solely for the purpose of this clause (e), record in book entries
maintained by such Lender the name and the amount of the participating interest
of each Participant entitled to receive payments in respect of such
participating interest. Any agreement or instrument pursuant to which a Lender
sells a participation shall provide that such Lender shall retain the sole right
to enforce the rights and remedies of a Lender under the Loan Documents and to
approve any amendment, modification or waiver of any provision of the Loan
Documents; provided that, such agreement or instrument may provide that such
Lender will not, without the consent of the Participant, take any action of the
type described in clauses (a) through (d) or clause (f) of Section 10.1 with
respect to Obligations participated in by that Participant. Subject to
clause (f), each Borrower agrees that each Participant shall be entitled to the
benefits of Sections 4.3, 4.4, 4.5, 4.6, 7.1.1, 10.3 and 10.4 to the same extent
as if it were a Lender and had acquired its interest by assignment pursuant to
clause (c). To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 4.9 as though it were a Lender, but only if
such Participant agrees to be subject to Section 4.8 as though it were a Lender.

(f) A Participant shall not be entitled to receive any greater payment under
Section 4.3, 4.4, 4.5, 4.6, 10.3 or 10.4 than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made
with each Borrower’s prior written consent. A Participant that would be a
Non-U.S. Secured Party if it were a Lender shall not be entitled to the benefits
of Section 4.6 unless each Borrower is notified of the participation sold to
such Participant and such Participant agrees, for the benefit of such Borrower,
to comply with the requirements set forth in Section 4.6 as though it were a
Lender. Any Lender that sells a participating interest in any Loans or other
interest to a Participant under this Section shall indemnify and hold harmless
the Borrowers and the Administrative Agent from and against any taxes,
penalties, interest or other costs or losses (including reasonable attorneys’
fees and expenses) incurred or payable by the Borrowers or the Administrative
Agent as a result of the failure of the Borrowers or the Administrative Agent to
comply with its obligations to deduct or withhold any Taxes from any payments
made pursuant to this Agreement to such Lender or the Administrative Agent, as
the case may be, which Taxes would not have been incurred or payable if such
Participant had been a Non-U.S. Lender that was entitled to deliver to the
Borrowers, the Administrative Agent or such Lender, and did in fact so deliver,
the applicable form or forms described in clause (e) of Section 4.6 entitling
such Participant to receive payments under this Agreement without deduction or
withholding of any United States federal taxes.

(g) Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank; provided that, no such pledge or assignment of a security interest
shall release a Lender from any of its obligations hereunder or substitute any
such pledgee or assignee for such Lender as a party hereto.

(h) In the event that S&P, Moody’s or Fitch shall, after the date that any
Person becomes a Lender (other than a Lender party to this Agreement as of the
Effective Date),

 

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downgrade the long-term certificate of deposit ratings of such Lender, and the
resulting ratings shall be below BBB, Baa2 or BBB respectively, or the
equivalent, then the Borrowers shall have the right, but not the obligation,
upon notice to such Lender and the Administrative Agent, to replace such Lender
with an Eligible Assignee or a financial institution (a “Replacement Lender”)
acceptable to the Borrowers and the Administrative Agent (such consents not to
be unreasonably withheld or delayed; provided that no such consent shall be
required if the Replacement Lender is an existing Lender), and upon any such
downgrading of any Lender’s long-term certificate of deposit rating, such Lender
hereby agrees to transfer and assign (in accordance with this Section) all of
its rights and obligations under the Loan Documents to such Replacement Lender;
provided that, (i) such assignment shall be without recourse, representation or
warranty (other than that such Lender owns the Loans and Notes being assigned,
free and clear of any Liens) and (ii) the purchase price paid by the Replacement
Lender shall be in the amount of such Lender’s Loans, together with all accrued
and unpaid interest and fees in respect thereof, plus all other amounts (other
than the amounts (if any) demanded and unreimbursed under Sections 4.2 through
(and including) 4.6, which shall be paid by the Borrowers), owing to such Lender
hereunder. Upon any such termination or assignment, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of, and
subject to the obligations of, any provisions of the Loan Documents which by
their terms survive the termination of this Agreement.

SECTION 10.12. Replacement of Lenders under Certain Circumstances. If at any
time

(a) the Borrowers become obligated to pay additional amounts described in
Section 4.3, 4.5 or 4.6 as a result of any condition described in such Sections
or any Lender ceases to make LIBO Rate Loans,

(b) any Lender becomes insolvent and its assets become subject to a receiver,
liquidator, trustee, custodian or other Person having similar powers,

(c) any Lender becomes a “Non-Consenting Lender” (as defined below in this
Section 10.12), or

(d) any Lender becomes a “Defaulting Lender”,

then, the Borrowers may, on ten Business Days’ prior written notice to the
Administrative Agent and such Lender, replace such Lender by causing such Lender
to (and such Lender shall be obligated to) assign pursuant to Section 10.11 all
of its rights and obligations under this Agreement to a Replacement Lender
selected by the Borrowers and consented to (unless the selected Replacement
Lender is also an existing Lender) by the Administrative Agent (such consent not
to be unreasonably withheld or delayed for a purchase price equal to the
outstanding principal amount of such Lender’s Commitments and all accrued
interest and fees and other amounts payable hereunder; provided, however, that
(x) neither the Administrative Agent nor any Lender shall have any obligation to
the Borrowers to find a replacement Lender or other such Person, (y) in no event
shall the Lender hereby replaced be required to pay or surrender to such
Replacement Lender or other Person any of the fees received by such Lender
hereby replaced pursuant to this Agreement and (z) in the case of a replacement
of a Lender to which the Borrowers becomes obligated to pay additional amounts
to such Lender prior to such Lender

 

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being replaced, the payment of such additional amounts shall be a condition to
the replacement of such Lender. Each Lender agrees that if it is replaced
pursuant to this Section, it shall execute and deliver to the Administrative
Agent a Lender Assignment Agreement to evidence such sale and purchase and shall
deliver to the Administrative Agent any Note (if the assigning Lender’s Loans
are evidenced by Notes) subject to such Lender Assignment Agreement; provided,
however, the failure of any Lender replaced pursuant to this Section to execute
a Lender Assignment Agreement shall not render such sale and purchase (and the
corresponding assignment) invalid. In the event that (x) the Borrowers or the
Administrative Agent has requested the Lenders to consent to a departure from,
modification of or waive of any provisions of the Load Documents or to agree to
any amendment thereto, (y) the consent, waiver or amendment in question requires
the agreement of Lenders (or the Lenders directly affected thereby) in
accordance with the terms of Section 10.1 and (z) the Required Lenders have
agreed to such consent, waiver or amendment, then any Lender who does not agree
to such consent, waiver or amendment shall be deemed a “Non-Consenting Lender”.
The Borrowers’ right to replace a Defaulting Lender pursuant to this Section is,
and shall be, in addition to, and not in lieu of, all other rights and remedies
available to the Borrowers against such Defaulting Lender under Applicable Law.

SECTION 10.13. Concerning Joint and Several Liability of the Borrowers.

(a) Each Borrower is accepting joint and several liability hereunder in
consideration of the financial accommodation to be provided by the Lenders under
this Agreement, for the mutual benefit, directly and indirectly, of each
Borrower and in consideration of the undertakings of each Borrower to accept
joint and several liability for the obligations of each other Borrower.

(b) Each Borrower jointly and severally hereby irrevocably and unconditionally
accepts, not merely as a surety but also as a co-debtor, joint and several
liability with the other Borrowers with respect to the payment and performance
of all of the Obligations, it being the intention of the parties hereto that all
the Obligations shall be the joint and several obligations of each Borrower
without preferences or distinction among them.

(c) If and to the extent that any Borrower shall fail to make any payment with
respect to any of the Obligations as and when due or to perform any of the
Obligations in accordance with the terms thereof, then in each such event, the
other Borrowers will make such payment with respect to, or perform, such
Obligation.

(d) The obligations of each Borrower under the provisions of this Section 10.13
constitute full recourse obligations of such Borrower, enforceable against it to
the full extent of its properties and assets, irrespective of the validity,
regularity or enforceability of this Agreement or any other circumstances
whatsoever.

(e) Except as otherwise expressly provided herein or in any other Loan
Documents, each Borrower hereby waives, to the fullest extent permitted by
applicable law, notice of acceptance of its joint and several liability, notice
of any Loan made under this Agreement, notice of occurrence of any Event of
Default, or of any demand for any payment under this Agreement, notice of any
action at any time taken or omitted by any Lender under or in respect of any of
the Obligations, any requirement of diligence and, generally, all demands,
notices and

 

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other formalities of every kind in connection with this Agreement. Each Borrower
hereby assents to, and waives, to the fullest extent permitted by applicable
law, notice of, any extension or postponement of the time for the payment of any
of the Obligations, the acceptance of any partial payment thereon, any waiver,
consent or other action or acquiescence by any Lender at any time or times in
respect of any default by any Borrower in the performance or satisfaction of any
term, covenant, condition or provision of this Agreement, any and all other
indulgences whatsoever by any Lender in respect of any of the Obligations, and
the taking, addition, substitution or release, in whole or in part, at any time
or times, of any security for any of the Obligations or in part, at any time or
times, of any security for any of the Obligations or the addition, substitution
or release, in whole or in part, of any Borrower. Without limiting the
generality of the foregoing, each Borrower assents to any other action or delay
in acting or failure to act on the part of any Lender, including, without
limitation, any failure strictly or diligently to assert any right or to pursue
any remedy or to comply fully with the applicable laws or regulations thereunder
which might, but for the provisions of this Section 10.13, afford grounds for
terminating, discharging or relieving such Borrower, in whole or in part, from
any of its obligations under this Section 10.13 it being the intention of each
Borrower that, so long as any of the Obligations remain unsatisfied, the
obligations of such Borrower under this Section 10.13 shall not be discharged
except by performance and then only to the extent of such performance. To the
fullest extent permitted by applicable law, the Obligations of each Borrower
under this Section 10.13 shall not be diminished or rendered unenforceable by
any winding up, reorganization, arrangement, liquidation, reconstruction or
similar proceeding with respect to any other Borrower or any Lender, and the
joint and several liability of the Borrowers hereunder shall continue in full
force and effect notwithstanding any absorption, merger, amalgamation or any
other change whatsoever in the name, membership, constitution or place of
formation of any Borrower or any Lender.

(f) The provisions of this Section 10.13 are made for the benefit of the Lenders
and their respective successors and assigns, and may be enforced by any such
Person from time to time against any of the Borrowers as often as occasion
therefor may arise and without requirement on the part of any Lender first to
marshal any of its claims or to exercise any of its rights against any of the
other Borrowers or to exhaust any remedies available to it against any of the
other Borrowers or to resort to any other source or means of obtaining payment
of any of the Obligations or to elect any other remedy. The provisions of this
Section 10.13 shall remain in effect until all the Obligations shall have been
paid in full or otherwise fully satisfied. If at any time, any payment, or any
part thereof, made in respect of any of the Obligations, is rescinded or must
otherwise be restored or returned by any Lender upon the insolvency, bankruptcy
or reorganization of any of the Borrowers, or otherwise, the provisions of this
Section 10.13 will forthwith be reinstated in effect, as though such payment had
not been made.

(g) Notwithstanding any provision to the contrary contained herein or in any
other of the Loan Documents, to the extent the joint obligations of a Borrower
shall be adjudicated to be invalid or unenforceable for any reason (including,
without limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers) then the obligations of each Borrower
hereunder shall be limited to the maximum amount that is permissible under
applicable law (whether federal or state and including, without limitation, the
Bankruptcy Code), after taking into account, among other things, such Borrower’s
right of contribution and indemnification from each other Obligor under
applicable law.

 

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SECTION 10.14. Other Transactions. Nothing contained herein shall preclude the
Administrative Agent or any other Lender from engaging in any transaction, in
addition to those contemplated by the Loan Documents, with the Parent or any of
its Affiliates in which the Parent or such Affiliate is not restricted hereby
from engaging with any other Person; PROVIDED, HOWEVER, TO THE EXTENT THAT THERE
IS ANY CONFLICT OR INCONSISTENCY BETWEEN ANY PROVISION HEREOF, ON THE ONE HAND,
AND ANY PROVISION OF ANY OTHER AGREEMENT BETWEEN ANY LENDER AND THE BORROWER OR
ANY OTHER OBLIGOR, ON THE OTHER HAND, THIS AGREEMENT SHALL CONTROL.

SECTION 10.15. Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, ANY LOAN DOCUMENT, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN)
OR ACTIONS OF THE ADMINISTRATIVE AGENT, THE LENDERS OR THE BORROWER IN
CONNECTION HEREWITH OR THEREWITH MAY BE BROUGHT AND MAINTAINED IN THE COURTS OF
THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK; PROVIDED, THAT, ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE ADMINISTRATIVE AGENT’S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, NEW YORK COUNTY AND OF
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE
BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL,
POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK
AT THE ADDRESS FOR NOTICES SPECIFIED IN SECTION 10.2. THE BORROWER HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY
SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT
ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT
THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF
ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE,
ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH
RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER HEREBY IRREVOCABLY WAIVES TO THE
FULLEST EXTENT PERMITTED BY LAW SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS
UNDER THE LOAN DOCUMENTS.

SECTION 10.16. Waiver of Jury Trial. THE ADMINISTRATIVE AGENT, EACH LENDER AND
THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE TO THE
FULLEST EXTENT PERMITTED BY LAW ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, EACH

 

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LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
ORAL OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE AGENT, SUCH LENDER OR THE
BORROWER IN CONNECTION THEREWITH. THE BORROWER ACKNOWLEDGES AND AGREES THAT IT
HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH
OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE ADMINISTRATIVE AGENT AND EACH
LENDER ENTERING INTO THE LOAN DOCUMENTS.

SECTION 10.17. Independence of Covenants and Default Provisions. All covenants
and default provisions contained in this Agreement or any other Loan Document
shall be given independent effect such that, in the event a particular action or
condition is not permitted by any of such covenants or default provisions, the
fact that it would be permitted by an exception to, or be otherwise within the
limitations of, another covenant or default provision shall not, unless
expressly so provided in such first covenant or default provision, avoid the
occurrence of a Default or an Event of Default if such action is taken or such
condition exists.

SECTION 10.18. Counsel Representation. THE BORROWER ACKNOWLEDGES AND AGREES THAT
IT HAS BEEN REPRESENTED BY COMPETENT COUNSEL IN THE NEGOTIATION OF THIS
AGREEMENT, AND THAT ANY RULE OR CONSTRUCTION OF LAW ENABLING THE BORROWER TO
ASSERT THAT ANY AMBIGUITIES OR INCONSISTENCIES IN THE DRAFTING OR PREPARATION OF
THE TERMS OF THIS AGREEMENT SHOULD DIMINISH ANY RIGHTS OR REMEDIES OF THE
ADMINISTRATIVE AGENT OR THE OTHER SECURED PARTIES ARE HEREBY WAIVED BY THE
BORROWER.

SECTION 10.19. PATRIOT Act Notification. The following notification is provided
to the Parent and the Borrowers pursuant to Section 326 of the PATRIOT Act:

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the
government fight the funding of terrorism and money laundering activities,
federal law requires all financial institutions to obtain, verify, and record
information that identifies each person or entity that opens an account,
including any deposit account, treasury management account, loan, other
extension of credit, or other financial services product. What this means for
the Borrowers: When the Borrowers open an account, the Administrative Agent and
the Lenders will ask for such Borrower’s name, tax identification number,
business address, and other information that will allow the Administrative Agent
and the Lenders to identify such Borrower. The Administrative Agent and the
Lenders may also ask to see such Borrower’s legal organization documents or
other identifying documents.

SECTION 10.20. Effect of Amendment and Restatement of the Existing Credit
Agreement. On the Effective Date, the Existing Credit Agreement shall be amended
and restated in its entirety. The parties hereto acknowledge and agree that
(a) this Agreement and the other Loan Documents, whether executed and delivered
in connection herewith or otherwise, do not constitute a novation or termination
of the “Obligations” (as defined in the Existing Credit

 

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Agreement) under the Existing Credit Agreement as in effect immediately prior to
the Effective Date and which remain outstanding and (b) the “Obligations” (as
amended and restated hereby and which are hereinafter subject to the terms
herein) are in all respects continuing.

SECTION 10.21. Confidential Information. Each of the Arrangers, the
Administrative Agent and the Lenders agrees to keep confidential all non-public
information provided to it by any Obligor or their respective Subsidiaries or
Affiliates pursuant to this Agreement; provided that nothing herein shall
prevent the Arrangers, the Administrative Agent or any Lender from disclosing
any such information (a) to the Arrangers, the Administrative Agent, any other
Lender or any Affiliate of any thereof, so long as such Affiliate is informed of
the confidential nature of the information and instructed to keep such
information confidential pursuant to this Section 10.21, (b) to any Participant
or assignee of the Loans (each, a “Transferee”) or prospective Transferee, so
long as such Transferee is informed of the confidential nature of such
information and instructed to keep such information confidential pursuant to
this Section 10.21, (c) to any of its employees, directors, agents, attorneys,
accountants, and other professional advisors, including, without limitation, any
financial advisor, so long as such Person is informed of the confidential nature
of the information and instructed to keep such information confidential pursuant
to this Section 10.21, (d) to any financial institution that is a direct or
indirect contractual counterparty in swap agreements or such contractual
counterparty’s professional advisor (so long as such contractual counterparty or
professional advisor to such contractual counterparty is informed of the
confidential nature of the information and instructed to keep such information
confidential pursuant to this Section 10.21), (e) upon the request or demand of
any Governmental Authority having jurisdiction over it, (f) in response to any
order of any court or other Governmental Authority or as may otherwise be
required pursuant to any requirement of law, (g) if requested or required to do
so in connection with any litigation or similar proceeding, (h) that has been
publicly disclosed other than in breach of this Section 10.21, (i) to the
National Association of Insurance Commissioners or any similar organization or
any nationally recognized rating agency that requires access to information
about a Lender’s investment portfolio in connection with ratings issued with
respect to such Lender (j) in connection with the exercise of any remedy
hereunder or under any other Loan Document, (k) with the Parent’s consent or
(l) that becomes available to the Arrangers, the Administrative Agent and the
Lenders on a non-confidential basis from a source other than a Borrower or the
Parent.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized as of the day and year
first above written.

 

HECLA MINING COMPANY,

as the Parent

By:  

/s/ Phillips S. Baker, Jr.

 

Name:

 

Phillips S. Baker, Jr.

 

Title:

 

President & CEO

HECLA GREENS CREEK MINING COMPANY

(f/k/a Kennecott Greens Creek Mining Company),

as a Borrower

By:  

/s/ Phillips S. Baker, Jr.

  Name:   Phillips S. Baker, Jr.   Title:   President

HECLA JUNEAU MINING COMPANY,

(f/k/a Kennecott Juneau Mining Company)

as a Borrower

By:  

/s/ James A. Sabala

  Name:   James A. Sabala   Title:   Vice President & Treasurer

HECLA ALASKA LLC,

as a Borrower

By:  

/s/ James A. Sabala

  Name:   James A. Sabala   Title:   Vice President & Treasurer for Managing
Member, Hecla Limited

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THE BANK OF NOVA SCOTIA,

as the Administrative Agent

By:  

/s/ Alastair Borthwick

  Name:   Alastair Borthwick   Title:   Director By:  

/s/ Stella Luna

  Name:   Stella Luna   Title:   Associate Director

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THE BANK OF NOVA SCOTIA,

as a Lender

By:  

/s/ Ray Clarke

  Name:   Ray Clarke   Title:   Managing Director By:  

/s/ Bob Deol

  Name:   Bob Deol  

Title:

 

Associate Director

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ING CAPITAL LLC,

as a Lender

By:  

/s/ Remko van de Water

  Name:   Remko van de Water   Title:   Director