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Exhibit 2
PURCHASE AND SALE AGREEMENT
between
HECLA MINING COMPANY
("Hecla")
-and-
CONSOLIDATED SILVER CORPORATION
("Con Sil")
DATED: August 23, 1995
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TABLE OF CONTENTS
RECITALS AND DEFINITIONS. . . . . . . . . . . . . . . . . 3
Section 1 Agreement of Purchase and Sale. . . . . . . . 3
Section 2 Consideration . . . . . . . . . . . . . . . . .4
Section 3 Closing . . . . . . . . . . . . . . . . . . . .4
Section 4 Cooperation in Structuring Transaction. . . . .4
Section 5 Representations and Warranties of Hecla . . . .4
Section 6 Representations and Warranties of Con Sil . . .5
Section 7 Hecla's Covenants . . . . . . . . . . . . . . .5
Section 8 Con Sil's Covenants . . . . . . . . . . . . . .6
Section 9 Hecla's Conditions Precedent to Closing . . . .7
Section 10 Con Sil's Conditions Precedent to Closing . . .8
Section 11 Hecla's Right of Offer. . . . . . . . . . . . .8
Section 12 Survival. . . . . . . . . . . . . . . . . . . 10
Section 13 General
(a) Entire Agreement . . . . . . . . . . . . . . . . . . 10
(b) Notices. . . . . . . . . . . . . . . . . . . . . . . 10
(c) Transfer . . . . . . . . . . . . . . . . . . . . . . 10
(d) Continuing Cooperation . . . . . . . . . . . . . . . 11
(e) Controlling Law; Attorney Fees . . . . . . . . . . . 11
(f) No Strict Construction . . . . . . . . . . . . . . . 11
(g) Execution in Counterparts. . . . . . . . . . . . . . 11
(h) Severability . . . . . . . . . . . . . . . . . . . . 11
(i) Captions . . . . . . . . . . . . . . . . . . . . . . 11
(j) Currency . . . . . . . . . . . . . . . . . . . . . . 12
EXHIBITS
EXHIBIT A: Contract dated April 27, 1995, between Minera
Hecla, S.A. de C.V. and Minera Portree de
Zacatecas, S.A. de C.V. ("Ojo Caliente Agreement")
EXHIBIT B: Hecla's expenditures
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PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (hereinafter referred to as
"Agreement") is made and effective this 23rd day of August, 1995,
by and between Hecla Mining Company, a Delaware corporation, whose
address is 0000 Xxxxxxx Xxxxx, Xxxxx x'Xxxxx, Xxxxx 00000-0000
(hereinafter referred to as "Hecla"), and Consolidated Silver
Corporation, an Idaho corporation, whose address is 0000 Xxxxxxx
Xxxxx, Xxxxx x'Xxxxx, Xxxxx 00000-0000 (hereinafter referred to as
"Con Sil").
RECITALS AND DEFINITIONS
WHEREAS, Hecla's wholly-owned Mexican subsidiary, Minera
Hecla, S.A. de C.V. (hereinafter referred to as "Minera
Hecla")(Minera Hecla and Hecla are sometimes collectively referred
to hereinafter as "Hecla") is a party to that certain Contract
dated April 27, 1995, with Minera Portree de Zacatecas, S.A. de
C.V. (hereinafter referred to as "Portree") a copy of which is
attached hereto as Exhibit A, incorporated herein by this reference
(hereinafter referred to as the "Ojo Caliente Agreement");
WHEREAS, Minera Hecla holds certain rights and obligations
pursuant to the Ojo Caliente Agreement, including, without
limitation, the right to manage the affairs of and to acquire
certain capital stock in Minera El Morro, S.A. de S.V., a Mexican
corporate entity (hereinafter referred to as "Minera El Morro"),
formed pursuant to the Ojo Caliente Agreement to hold title to,
explore and develop the mineral potential of certain mining
concessions and other rights and properties described therein
(hereinafter referred to as the "Property");
WHEREAS, Hecla wishes to sell to Con Sil and Con Sil wishes to
purchase from Hecla all of Minera Hecla's rights, duties and
obligations, and any and all stock held by Minera Hecla in Minera
El Morro pursuant to the Ojo Caliente Agreement, all on the terms
and conditions specified in this Agreement;
NOW, THEREFORE, the parties, intending to be legally bound, do
hereby agree as follows:
AGREEMENT
1. AGREEMENT OF PURCHASE AND SALE. Hecla hereby agrees to
cause Minera Hecla to sell and assign to Con Sil, and Con Sil does
hereby agree to purchase, or cause a wholly-owned subsidiary of Con
Sil to purchase, and assume from Hecla, all on the terms and
conditions specified herein, all of Minera Hecla's rights, duties
and obligations pursuant to the Ojo Caliente Agreement, and any and
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all capital stock of Minera El Morro in the possession of Hecla or
its subsidiaries pursuant to the Ojo Caliente Agreement upon the
Closing of this Agreement.
2. CONSIDERATION. Con Sil shall pay to Hecla in cash at
Closing the aggregate amount of all of expenditures incurred by
Hecla or Minera Hecla in (i) the acquisition of the Ojo Caliente
Agreement, (ii) pursuant to the Ojo Caliente Agreement, and (iii)
for the benefit of Minera El Morro's Property, subject to Section
7(a) of this Agreement (the "Purchase Price"), in consideration of
Hecla's grant of its rights pursuant to the Ojo Caliente Agreement.
Hecla's expenditures through the dates indicated therein are
summarized in Exhibit B, attached hereto and incorporated herein by
this reference.
3. CLOSING. The closing of the transactions contemplated by
this Agreement shall take place within three (3) business days
after the later to occur of: (i) Con Sil's shareholder meeting
and (ii) Con Sil's closing of the Sunshine Agreement (as that term
in hereinafter defined), in accordance with Section 8(b) of this
Agreement, but in any event no later than November 15, 1995, at
Hecla's Coeur d'Alene, Idaho offices, or such other time and place
as may be mutually agreed upon by Hecla and Con Sil. At Closing,
Hecla shall deliver to Con Sil (i) a fully executed and
acknowledged assignment and assumption, in a form registrable by
all applicable governmental authority, conveying Minera Hecla's
rights in the Ojo Caliente Agreement; (ii) any and all stock held
by Minera Hecla in Minera El Morro to Con Sil; and (iii) a summary
of Hecla's expenditures to the date of Closing, presented in
substantially the same form as Exhibit B. All taxes assessed on
the transaction and all registration and recording fees shall be
paid by Con Sil.
4. COOPERATION IN STRUCTURING TRANSACTION. Hecla and Con Sil
shall cooperate with each other in structuring and in closing the
transactions contemplated herein in a manner which will minimize
taxes payable to all jurisdictions on the transfers of Minera
Hecla's rights in the Ojo Caliente Agreement and shares of stock
from Minera Hecla to Con Sil, and Con Sil shall have the right to
form such subsidiary companies as are necessary, proper or
convenient to the completion of such transfers, and each of Hecla
and Con Sil shall cause their respective subsidiary companies to
take all such actions as are necessary, proper and convenient in
completion thereof.
5. REPRESENTATIONS AND WARRANTIES OF HECLA. Hecla represents
and warrants to Con Sil:
(a) That it and its affiliates are corporations duly
incorporated and in good standing in their respective states
or jurisdictions of their incorporation;
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(b) That it has the capacity to enter into this
Agreement with respect to the transactions contemplated herein
and that all corporate and other actions required to authorize
it to enter into and perform this Agreement have been properly
taken or shall be properly taken prior to Closing;
(c) That entering into and performing this Agreement
will not breach any other agreement or arrangement to which it
is a party;
(d) That this Agreement has been duly executed by its
authorized representatives, and is valid and binding upon it
in accordance with its terms;
(e) That the Ojo Caliente Agreement is valid and
binding, no default exists with respect to Hecla's performance
thereof, and Minera Hecla may assign its interest therein in
accordance with the terms thereof.
6. REPRESENTATIONS AND WARRANTIES OF CON SIL. Con Sil
represents and warrants to Hecla:
(a) That it is a corporation duly incorporated and in
good standing in its state of incorporation;
(b) That it has the capacity to enter into this
Agreement with respect to the transactions contemplated herein
and that all corporate and other actions required to authorize
it to enter into and perform this Agreement have been properly
taken or shall be properly taken prior to Closing;
(c) That entering into and performing this Agreement
will not breach any other agreement or arrangement to which it
is a party;
(d) That this Agreement has been duly executed by its
authorized representatives, and is valid and binding upon it
in accordance with its terms.
7. HECLA'S COVENANTS. Between the effective date of this
Agreement and the Closing:
(a) Hecla shall expend no more than an aggregate total
of eight hundred thousand dollars ($800,000): (i) in the
acquisition of the Ojo Caliente Agreement; (ii) pursuant to
the Ojo Caliente Agreement; and (iii) for the benefit of
Minera El Morro's Property. Any expenditures by Hecla in
excess of the amount specified herein shall not be payable
pursuant to Section 2 of this Agreement.
(b) Hecla shall permit Con Sil and its representatives,
at Con Sil's sole risk and expense, to have full access to
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Minera El Morro's Property and all books and records in
Hecla's possession pertaining thereto;
(c) Hecla shall make its personnel and documents related
the transaction contemplated hereby reasonably available to
Con Sil as it may from time to time request;
(d) Hecla shall furnish such necessary information and
reasonable assistance as may be necessary to complete the
transactions contemplated herein;
(e) Hecla shall operate Minera El Morro's Properties and
perform its obligations under the Ojo Caliente Agreement in
accordance with its terms, consistent with past management
practices and as a reasonably prudent operator.
(f) Hecla shall report to Con Sil all significant
activities, exploration results and such other material
developments which occur with respect to the Ojo Caliente
Agreement or concerning Minera El Morro's Property.
(g) Hecla shall not amend, or take any steps to amend,
the Ojo Caliente Agreement, nor shall Hecla grant any interest
in or otherwise encumber the Ojo Caliente Agreement, except
with the express written consent of Con Sil, which consent
shall not be unreasonably withheld.
(h) Hecla shall perform and complete prior to the
Closing all actions necessary to facilitate the assignment and
assumption of the Ojo Caliente Agreement and of any and all
stock held by Minera Hecla in Minera El Morro pursuant to the
terms of this Agreement.
(i) Hecla shall not issue any press release or make
other publication of the terms of this Agreement without
giving notice prior to such release or publication together
with a draft thereof to Con Sil, and obtaining the written
consent of Con Sil thereto, which consent shall not be
unreasonably withheld. Con Sil's consent shall not be required
for such press releases and announcements as may be required
by law or by any securities exchange on which Hecla's stock is
traded, and Con Sil shall nevertheless be provided with prior
notice of such release or publication together with a draft of
any such press release.
8. CON SIL'S COVENANTS. Between the effective date of this
Agreement and the Closing:
(a) Con Sil shall furnish such necessary information and
reasonable assistance as may be necessary to complete the
transactions contemplated herein;
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(b) Con Sil shall complete prior to the Closing a
meeting of its shareholders, and at such meeting its
shareholders shall consider for their approval the transaction
documented by that certain Purchase Agreement among Con Sil
and Sunshine Precious Metals, Inc., dated July 1, 1995 (herein
referred to as the "Sunshine Agreement"), and, if such
shareholder approval is obtained, Con Sil shall complete the
closing of the Sunshine Agreement;
(c) Con Sil shall report to Hecla all significant
activities, results and such other material developments which
occur which may effect Con Sil's obligations pursuant to this
Agreement;
(d) Con Sil shall perform and complete prior to the
Closing all actions necessary to facilitate the assignment and
assumption of the Ojo Caliente Agreement and of any and all
stock held by Minera Hecla in Minera El Morro pursuant to the
terms of this Agreement;
(e) Con Sil shall not issue any press release or make
other publication of the terms of this Agreement without
giving notice prior to such release or publication together
with a draft thereof to Hecla, and obtaining the written
consent of Hecla thereto, which consent shall not be
unreasonably withheld. Hecla's consent shall not be required
for such press releases and announcements as may be required
by law or by any securities exchange on which Con Sil's stock
is traded, and Hecla shall nevertheless be provided with prior
notice of such release or publication together with a draft of
any such press release.
9. HECLA'S CONDITIONS PRECEDENT TO CLOSING. Hecla shall not
be obligated to close the transactions contemplated by this
Agreement unless and until all of the following conditions
precedent are met at or before the time of Closing, unless waived
in writing by Hecla:
(a) No outstanding material liens, encumbrances or other
liabilities shall exist against Hecla's interest in the Ojo
Caliente Agreement;
(b) Each of Con Sil's representations and warranties set
forth in Section 6 of this Agreement shall be true and
correct;
(c) Con Sil shall have completed a meeting of its
shareholders, and at such meeting its shareholders shall have
approved the Sunshine Agreement;
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(d) Con Sil shall have completed the closing of the
Sunshine Agreement in accordance with its terms and
conditions.
10. CON SIL'S CONDITIONS PRECEDENT TO CLOSING. Con Sil shall
not be obligated to close the transactions contemplated by this
Agreement unless and until all of the following conditions
precedent are met at or before the time of Closing, unless waived
in writing by Con Sil:
(a) No outstanding material liens, encumbrances or other
liabilities shall exist against Hecla's interest in the Ojo
Caliente Agreement;
(b) Each of Hecla's representations and warranties set
forth in Section 5 of this Agreement shall be true and
correct;
(c) Hecla shall have received no notice of any breach of
or default in its performance of its obligations under any
material term of the Ojo Caliente Agreement;
(d) Con Sil shall have completed a meeting of its
shareholders, and at such meeting its shareholders shall have
approved the transaction documented by that certain Purchase
Agreement among Con Sil and Sunshine Precious Metals, Inc.,
dated July 1, 1995;
(e) Con Sil shall have completed the closing of the
Sunshine Agreement in accordance with its terms and
conditions.
11. HECLA'S RIGHT OF OFFER. From and after Closing:
(a) If at any time during the exploration or development
of the Property Con Sil or Minera El Morro wish to sell,
option, enter into a farmout, lease, joint venture, or other
agreement whereby Con Sil or Minera El Morro would transfer or
grant any portion of or all of its rights in Minera El Morro
or the Property to a third party (hereinafter referred to as
an "Opportunity"), Con Sil shall provide written notice to
Hecla of the Opportunity containing a detailed explanation of
the terms and conditions thereof. Hecla shall have sixty (60)
days after its receipt of such notice in which to provide Con
Sil with a written notice of its exercise of its right to
enter into an agreement with Con Sil or Minera El Morro on the
terms contained in Con Sil's notice of Opportunity to Hecla.
In the event that Hecla elects to exercise its right to
acquire the Opportunity pursuant to this Section 11 of this
Agreement, Hecla and Con Sil shall promptly and in good faith
proceed to finalize and execute a written agreement setting
forth the terms thereof within thirty (30) days of Hecla's
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notice. In the event Hecla does not exercise its right under
this Section 11 of this Agreement within said sixty (60) day
period Con Sil or Minera El Morro may for a period of one
hundred eighty (180) days thereafter negotiate and enter into
an agreement with any third party on terms no more favorable
to such third party as those offered to and refused by Hecla.
In the event Con Sil or Minera El Morro does not enter into an
agreement with a third party on such terms within one hundred
eighty (180) days of Hecla's refusal, Hecla's rights pursuant
to this Section 11 of this Agreement shall be automatically
revived, and Con Sil shall again be obligated to provide
notice to Hecla of its or of Minera El Morro's intention to
enter into an agreement with third parties as provided for
herein.
(b) In the event that Con Sil or Minera El Morro cancels
or terminates, or receives notice of any cancellation or
termination of a sale, option, farmout, lease, joint venture,
or other agreement whereby a third party obtained or would
obtain any portion of or all Con Sil's rights in Minera El
Morro or its Property, Con Sil shall give written notice of
such cancellation or termination to Hecla, together with a
summary and copies of supporting documentation of all
additions to mineral reserves located on the Properties and
feasibility studies prepared with respect to the Properties as
a whole. In the event that Con Sil or Minera El Morro
thereafter seek participation of a third party in the manner
described in Section 11(a) of this Agreement, Con Sil or
Minera El Morro shall first provide Hecla with the notices,
and Hecla may exercise the rights specified, therein.
(c) In the event that Con Sil or Minera El Morro intends
to abandon or otherwise surrender its interest in Minera El
Morro or any of its Property, without receiving any
consideration therefor, Con Sil shall first give written
notice of its intention to Hecla prior to March 1 of the year
in which Con Sil intends to abandon or surrender such Property
or interest, and offer to transfer or assign such Property or
interest to Hecla at no cost to Hecla other than as specified
hereinbelow, and Hecla shall have fifteen (15) business days
to elect to accept Con Sil's or Minera El Morro's transfer or
assignment and pay the cost of conveyancing and recording.
Con Sil and Minera El Morro shall provide any records in its
possession as requested by Hecla that relates to any Property
or interest being abandoned by Con Sil and transferred to
Hecla. In the event Con Sil does not advise Hecla by March 1
of such year of its intentions to abandon or surrender any of
Minera El Morro's Property or part(s) thereof, and in the
absence of written consent from Hecla thereto, Con Sil shall
maintain and cause Minera El Morro to maintain all its
properties in good standing, make all filings and pay all
taxes, assessment, rental, advance royalty or other fees
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associated therewith necessary or convenient to keep all
Minera El Morro's Property in good standing until March 31 of
the following year. Furthermore, Con Sil shall perform or
ensure the performance by Minera El Morro of all reclamation
work required by agreement or by local, state or federal law,
regulations or permits with respect to the abandoned property
transferred to Hecla pursuant to this Section 11 of this
Agreement.
12. SURVIVAL. The provisions of Section 11 of this Agreement
shall be deemed to survive the Closing of the transactions
contemplated herein, and are expressly agreed by the parties not to
be merged into any closing document.
13. GENERAL.
(a) ENTIRE AGREEMENT. This Agreement contains the
entire agreement between the parties hereto and supersedes and
replaces any and all other agreements.
(b) NOTICES. All notices and other communications
("Notices") to a party hereto shall be in writing and shall be
addressed respectively as follows:
If to Hecla: Hecla Mining Company
0000 Xxxxxxx Xxxxx
Xxxxx x'Xxxxx, Xxxxx 00000-0000
ATTN: Vice President - Metal Mining
If to Con Sil: Consolidated Silver Corporation
0000 Xxxxxxx Xxxxx
Xxxxx x'Xxxxx, Xxxxx 00000-0000
ATTN: President
All Notices shall be given either by personal delivery to
the party, or by electronic communication, with an original
copy and confirmation sent by registered mail return receipt
requested, or by registered mail return receipt requested.
All Notices shall be effective and shall be deemed delivered:
(i) If by personal delivery on the date of delivery during
normal business hours, and if not delivered during normal
business hours, on the next business day following delivery,
and (ii) if by electronic communication on the next business
day following receipt of the electronic communication, and
(iii) if solely by mail on the next business day after actual
receipt. A party may change its address by Notice to the
other parties hereto.
(c) TRANSFER. Subject to Section 11 hereof, Con Sil
shall not transfer or assign, and shall not allow Minera El
Morro to transfer or assign, any portion or all the Property
in respect of which there exists an obligation to Hecla
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hereunder unless the transferee or assignee first agrees in
writing to assume the obligations of Con Sil to Hecla under
the terms of this Agreement.
(d) CONTINUING COOPERATION. Each of the parties hereto,
upon the request of the other party, shall do, execute,
acknowledge and deliver, or cause to be done, executed,
acknowledged or delivered all such further acts, documents,
assignments, transfers, conveyances, and assurances, both
before and after Closing, as may be reasonably necessary or
desirable to effect complete consummation of the transactions
contemplated by this Agreement.
(e) CONTROLLING LAW; ATTORNEY FEES. The terms and
conditions of this Agreement shall be interpreted in
accordance with the laws of the State of Idaho, United States
of America, and any dispute of fact or law arising as a result
of the transactions contemplated by this Agreement shall be
resolved by the appropriate Idaho state court or in the United
States District Court for the District of Idaho, and the
parties hereto do hereby submit and consent to the exclusive
jurisdiction of the above-mentioned courts for purposes of
resolving any dispute arising under this Agreement. The
prevailing party in any dispute arising in connection with
this agreement shall be entitled to an award of its reasonable
attorneys' fees, expenses and costs.
(f) NO STRICT CONSTRUCTION. This Agreement and wording
contained herein have been arrived at by the mutual
negotiation of the parties. Accordingly, no provision of this
Agreement shall be construed against one party or in favor of
another party merely by reason of draftsmanship.
(g) EXECUTION IN COUNTERPARTS. This Agreement may be
executed in two or more counterparts, each of which shall be
deemed to be an original, but which together shall be deemed
to constitute one and the same instrument.
(h) SEVERABILITY. Each provision of this Agreement
shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this
Agreement is held to be prohibited by or invalid under
applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining
provision of this Agreement.
(i) CAPTIONS. The captions used in this Agreement are
for convenience of reference only and do not constitute a part
of this Agreement, and the captions shall not be construed to
limit, characterize, or in any way affect any provision of
this Agreement.
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(j) CURRENCY. All references to money in this Agreement
are references to the lawful currency of the United States of
America, unless expressly stated otherwise herein.
IN WITNESS WHEREOF the parties have executed this Agreement
effective as of the day and year first above written.
HECLA MINING COMPANY CONSOLIDATED SILVER CORPORATION
By: /s/ X. X. Xxxxxxxxx By: /s/ Xxxxxx X. Xxxxxxx
--------------------------- -----------------------
Name: X. X. Xxxxxxxxx Name: Xxxxxx X. Xxxxxxx
Title: Vice President - Controller Title: Vice President
ATTEST: ATTEST:
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxxxxx X. Xxxxx
--------------------------- ------------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxxxxxxx X. Xxxxx
Title: Vice President - Secretary Title: Assistant Secretary
