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EXHIBIT 10.2
DEBT SETTLEMENT AGREEMENT
THIS AGREEMENT is made as of the 18th day of April, 1997, by
and between ConSil Corp., an Idaho corporation with an office at
0000 Xxxxxxx Xxxxx, Xxxxx x'Xxxxx, Xxxxx 00000-0000 (hereinafter
referred to as "ConSil"), and Hecla Mining Company, a Delaware
corporation, whose address is 0000 Xxxxxxx Xxxxx, Xxxxx x'Xxxxx,
Xxxxx 00000-0000 (hereinafter referred to as "Hecla").
RECITALS AND DEFINITIONS
WHEREAS, Hecla and ConSil entered into that certain Loan
Agreement dated June 28, 1996, as amended February 19, 1997 and
further amended as of April 30, 1996 (hereinafter referred to, as
amended, as the "Loan Agreement"), pursuant to which Hecla loaned
to ConSil certain funds, more specifically described in this
Agreement, which funds ConSil acknowledges are due and owing;
WHEREAS, Minera Hecla, S.A. de C.V., a corporate entity
organized and existing pursuant to the laws of the Republic of
Mexico owned entirely by Hecla (hereinafter referred to as "Minera
Hecla") advanced certain moneys, including payment for trade goods
and services rendered on behalf of ConSil and its wholly owned
subsidiary, Minera ConSil, S.A. de C.V., a corporate entity
organized and existing pursuant to the laws of the Republic of
Mexico (hereinafter referred to as "Minera ConSil") pursuant to the
terms of that certain Technical Services Agreement dated December
22, 1995 (hereinafter referred to as "Technical Services
Agreement"), which moneys ConSil acknowledges are due and owing to
Minera Hecla; and
WHEREAS, ConSil and Minera ConSil wish to settle a portion of
those debts to Hecla and Minera Hecla under the Loan Agreement and
Technical Services Agreement, the amount of which is U.S. $500,000
(hereinafter referred to as the "Past Debt"), by repaying Hecla
with an option either to (i) have ConSil grant a royalty interest
in all proceeds from mineral production of ConSil, more
specifically described herein, or (ii) have ConSil issue to Hecla
authorized common stock of ConSil, the number of shares of which
shall be calculated in accordance with this Agreement. Either
option shall be deemed to be in full satisfaction of the Past Debt,
and Hecla and Minera Hecla are willing to accept such option as
consideration for and in full satisfaction of the Past Debt, all on
the terms and conditions set out herein; and
WHEREAS, ConSil and Minera ConSil shall settle the balance of
all debt in excess of the Past Debt incurred or to be incurred
pursuant to the Loan Agreement or the Technical Services Agreement,
in such amount as may be outstanding on the Closing Date (as
hereinbelow defined) (hereinafter referred to as the "Current
Debt") by the assignment of its United States Income Tax refund for
the tax year 1995, anticipated to be approximately $170,000
(hereinafter referred to as the "Tax Refund"), and payment of cash
or other currently available funds from the proceeds of certain
financing which ConSil is currently pursuing, all as more
specifically described herein;
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NOW, THEREFORE, in consideration of the foregoing and the
following mutual promises, benefits, covenants and agreements, the
adequacy of which is hereby acknowledged, the parties, intending to
be legally bound, do hereby agree as follows:
AGREEMENT
1. SETTLEMENT OPTIONS. With respect to the settlement of the
Past Debt, ConSil hereby grants Hecla the option to elect either:
(a) A two percent (2%) net sales returns royalty interest up
to a maximum payment of U.S. $500,000 in all proceeds actually
received by ConSil or its Affiliates (as defined in Section 19 of
this Agreement) from all mineral production of ConSil or its
Affiliates, from whatever source and wherever located, from any
smelter, refinery or other purchaser for the sale of the ores,
metals, including bullion, minerals, mineral substances or
concentrates produced from properties or pursuant to rights owned
wholly or in part by ConSil or its Affiliates, after deducting from
such proceeds the following charges to the extent that they are not
deducted by the purchaser in computing payment: Smelting and
refining charges; penalties; smelter assay costs and umpire assay
costs; costs of freight and handling ores, metals or concentrates
subsequent to mining and concentrating from local production
facilities to any smelter, refinery or other purchaser thereof; and
insurance costs on all such products; (hereinafter referred to as
the "Royalty"); provided, however, that the Royalty shall not be
payable from products of the Candaleria mine, located in the state
of Zacatecas, Republic of Mexico, currently owned by Minas La
Colorada, S.A. de C.V., a Mexican corporation, unless and until the
early of the following: (i) ConSil completes the expansion of the
milling capacity to at least 450 tons per day, which shall be
deemed to occur when the expanded mill is functioning at ninety
percent (90%) of design capacity for thirty (30) days of continuous
operation; or (ii) the second anniversary of this Agreement; or
(b) ConSil issuing to Hecla shares of ConSil's authorized,
fully paid and nonassessable common stock, par value ten cents
($0.10) per share (the "Shares"), the number of which shall be
calculated as follows: The value ascribed to each share of ConSil
common stock issued pursuant to this Agreement shall be, subject to
applicable regulatory and stock exchange approvals and all
conditions of this Agreement being met, the price of the stock on
the day before Hecla's election to accept shares pursuant to this
Section 1(b), less twenty percent (20%), or such other maximum
amount as is allowed in accordance with Policy 13 of the Vancouver
Stock Exchange Listed Companies Manual (the "Share Price"). The
number of Shares ConSil shall issue to Hecla shall be determined by
dividing U.S. $500,000 by the Share Price, the quotient of which
shall be the number of Shares ConSil shall issue to Hecla, with any
resulting fraction rounded down to the next whole number, thereby
obviating the need for issuance of any fractional shares.
2. METHOD OF ELECTION. Hecla may elect its option at any
time, but in any event on or before the close of business, Pacific
Time Zone, on August 1, 1997, by providing written notice of its
choice of settlement options to ConSil as defined in Section 1 of
this Agreement.
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3. CONDITIONS PRECEDENT. The Agreement is subject to the
following conditions:
(a) That the approval of the Vancouver Stock Exchange is
granted or will be obtained for this transaction in a timely
fashion following the date hereof;
(b) That, if required, the approval of the Vancouver Stock
Exchange or any other regulatory body having jurisdiction has been
given or will be obtained for this transaction in a timely fashion
following the date hereof;
(c) That the Board of Directors of ConSil approve of this
transaction;
(d) That ConSil execute and deliver to Hecla all documents,
certificates and to take all such other steps as may be necessary
or desirable or convenient and proper to carry out the intent of
the transactions contemplated herein; and
(e) That ConSil obtains funds sufficient to pay the Past Debt
from the financing associated with that certain transaction whereby
ConSil acquires all or substantially all of the assets of Minas La
Colorada, S.A. de C.V., ("MLC") a Mexican corporate entity with
headquarters in Durango, State of Durango, Mexico, and mining
operations in the Chalchihuites Mining District of the State of
Zacatecas, Mexico, as contemplated in that certain Heads of
Agreement dated December 19, 1996, among ConSil, MLC and Ing. Xxxx
Xxxxx Xxxxxxxxx Xxxxx and Ing. Xxxxx Xxxxx Xxxxxx Xxxxxx
(hereinafter referred to as the "MLC Transaction").
(f) That the conditions precedent as set out in this section
must be satisfied on or before August 1, 1997.
(g) That ConSil deliver an United States Internal Revenue
Service Form 2848 Power of Attorney in favor of an officer of Hecla
Mining Company authorizing the delivery of ConSil's Tax Refund
directly to Hecla (hereinafter referred to as the "Power of
Attorney").
4. COVENANTS OF CONSIL. ConSil hereby covenants that:
(a) It shall use its best efforts to obtain the approval of
this transaction by its Board of Directors;
(b) It shall use its best efforts to obtain the approval of
the Vancouver Stock Exchange, and any other regulatory authorities
having jurisdiction over this transaction;
(c) It shall grant Hecla the rights enumerated in Schedule 1
attached hereto and incorporated herein by this reference with
respect to shares issued, if any, pursuant to Section 1(b) of this
Agreement;
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(d) It shall use its best efforts to complete the financing
associated with the MLC Transaction.
(e) It shall execute and deliver the Power of Attorney for
the Tax Refund to Hecla;
(f) It shall execute and deliver to Hecla all documents,
certificates and to take all such other steps as may be necessary
or desirable or convenient and proper to carry out the intent of
the transactions contemplated herein.
5. COVENANTS OF HECLA. Hecla hereby covenants that:
(a) Neither it nor Minera Hecla has assigned any of the debt
owed to them by ConSil or Minera ConSil;
(b) All debts specified herein by Hecla and Minera Hecla are
valid obligations, accrued in respect of the Loan Agreement, the
Technical Services Agreement, and the interest thereon or which may
otherwise properly be charged to ConSil or Minera ConSil;
(c) In consideration of the covenants and agreements set out
in this Agreement, the obligations due and owing to Hecla and
Minera Hecla by ConSil and Minera ConSil will be fully and duly
discharged upon the satisfaction and performance of all the
conditions to this Agreement, and that Hecla and Minera Hecla
irrevocably agrees to release ConSil and Minera ConSil from its
obligations in respect of the Loan Agreement, the Technical
Services Agreement, interest thereon and otherwise properly
chargeable obligations of ConSil or Minera ConSil; and
(d) It shall direct its agents to pursue the Tax Refund on
ConSil's behalf.
6. CLOSING. Closing of the transactions contemplated by this
Agreement shall take place by ConSil's authorized representative
delivering to Hecla, (a) in accordance with Hecla's election
pursuant to paragraph 1 of this Agreement, either (i) a duly
executed certificate evidencing Hecla's ownership of the Shares or
(ii) an executed and acknowledged conveyance of the Royalty in
Spanish, suitable for registration and recording with all public
registries and jurisdiction necessary or convenient thereto, with
an English translation acceptable to Hecla in its reasonable
discretion, together with (b) payment to Hecla in currently
available funds of the entire amount of all Current Debt, less the
amount of the Tax Refund, in exchange for which Hecla's authorized
representative shall deliver to ConSil an acknowledgment of the
Release of all Past Debt and Current Debt, together with ConSil's
original promissory note forming a part to the Loan Agreement
marked "Paid in Full."
7. HECLA'S CERTIFICATION AND ACKNOWLEDGMENT. Hecla
acknowledges that it is aware that the Shares may contain a legend
denoting the restrictions on transfer imposed by the policies of
those stock exchanges where ConSil's capital stock is traded, the
securities commissions of any jurisdiction to which ConSil's stock
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is subject, and the U.S. Securities Act of 1933, the U.S.
Securities Exchange Act of 1934, or any regulations promulgated
thereunder.
8. ACCELERATION OF DEBT; TIME OF THE ESSENCE. This Agreement
shall be null, void and unenforceable, and the entire amount of the
Past Debt and Current Debt shall be and become immediately due and
payable in accordance with the Loan Agreement if closing has not
occurred on or before August 1, 1997. Time is of the essence in
the performance of this Agreement.
9. INTERPRETATION. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Idaho.
10. EXECUTION & DELIVERY. This Agreement may be executed in
several parts in the same form and such parts as so executed shall
together form an original agreement, which shall be read together
as if all the signing parties hereto had executed one copy of this
Agreement.
11. ATTORNEYS FEES. The prevailing party in any dispute
arising pursuant to or under this Agreement shall be entitled to an
award of its reasonable attorneys' fees and costs.
12. BINDING EFFECT. This Agreement shall inure to the
benefit of, and shall be binding on, the respective successors and
permitted assigns of the parties.
13. Assignment. The rights of ConSil under this Agreement
are personal to ConSil, and ConSil may not assign or transfer any
of its rights or obligations under this Agreement without the
prior, express and written consent of Hecla, which consent shall be
in Hecla's sole and absolute discretion, and any purported
assignment or transfer shall be void.
14. ENTIRE AGREEMENT. This Agreement shall constitute the
entire agreement between the parties with respect to the
transactions contemplated herein, and any prior understanding or
representation of any kind preceding the date of this Agreement
shall not be binding on either party except to the extent
incorporated in this Agreement.
15. MODIFICATION OF AGREEMENT. Any modification of this
Agreement or additional obligation assumed by either party in
connection with this Agreement shall not be binding unless
evidenced in writing and signed by each party's duly authorized
representative.
16. PARAGRAPH HEADINGS. The titles to the paragraphs of this
Agreement are solely for the convenience of the parties and shall
not be used to explain, modify, simplify or aid in the
interpretation of the provisions of this Agreement.
17. SEVERABILITY. If any provision of this Agreement shall
be held invalid under any applicable laws, such invalidity shall
not affect any other provision of this Agreement which can be given
effect without the invalid provision, and, to this end, the
provisions of this Agreement are severable.
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18. CURRENCY. All references to currency in this Agreement
shall be deemed to refer to legal tender of the United States of
America.
19. AFFILIATES. For purposes of this Agreement, an
"Affiliate" shall be deemed to mean any entity directly or
indirectly controlled by ConSil, which directly or indirectly
controls ConSil, or which is directly or indirectly controlled by
the same entity which directly or indirectly controls ConSil, other
than Hecla.
IN WITNESS WHEREOF, this Agreement has been executed by the
parties as of the date and year first written above.
ConSil CORP. HECLA MINING COMPANY
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxx X. Xxxxxxxx
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XXXXX X. XXXXX, Chairman XXXX X. XXXXXXXX,
Vice-President
ATTEST: ATTEST:
/s/ Xxxxxxxxx X. Xxxxx /s/ Xxxxxxx X. Xxxxx
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XXXXXXXXX X. XXXXX, Secretary XXXXXXX X. XXXXX, Secretary
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SCHEDULE 1
TO
DEBT SETTLEMENT AGREEMENT
This Schedule 1 to the Debt Settlement Agreement (the
"Agreement") between ConSil Corp. ("ConSil) and Hecla Mining
Company ("Hecla") defines specific rights granted to Hecla by
ConSil pursuant to paragraph 4(c) of the Agreement.
REGISTRATION RIGHTS
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1. U.S. REGISTRATION.
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1.1. PIGGYBACK RIGHTS. Each time that ConSil proposes for any
reason to register any of its securities under the Securities Act
("Proposed Registration"), other than pursuant to a registration
statement on Form S-4 or Form S-8 or similar or successor forms,
ConSil shall promptly give written notice of such Proposed
Registration to Hecla (including whether such Proposed Registration
is an underwritten public offering) and shall offer Hecla the right
to request inclusion of any shares in the Proposed Registration.
Hecla shall have twenty (20) days from the receipt of such notice
to deliver to ConSil a written request specifying the number of
shares Hecla intends to sell and Hecla's intended method of
disposition (if not an underwritten public offering). Upon receipt
of such request, ConSil shall promptly use its reasonable best
efforts to cause all such shares to be registered under the
Securities Act in connection with such Proposed Registration. If
the Proposed Registration is an underwritten public offering,
ConSil shall cause the managing underwriter to include the shares
proposed to be included therein to be included on the same terms
and conditions as any similar securities, if any, of ConSil
included therein. Hecla shall enter into the same underwriting
agreement as shall ConSil and the other selling security holders,
if any, provided that such underwriting agreement
1.1.1. contains (a) representations, warranties and
agreements on the part of the selling security holders that
are not substantially different from those customarily made by
selling security holders in underwriting agreements with
respect to secondary distributions and (b) representations,
warranties and agreements on the part of ConSil and such other
terms and provisions as are customarily contained in
underwriting agreements with respect to secondary
distributions and
1.1.2. provides Hecla with an indemnification
substantially similar to the indemnification provided by
paragraph 1.6 hereinbelow.
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Notwithstanding the foregoing, if the managing underwriter of
such underwritten public offering delivers a written opinion to
ConSil, with a copy to Hecla, that the inclusion of any or all
shares proposed to be included in the underwritten public offering,
together with any other issued and outstanding shares of Common
Stock proposed to be included therein by other stockholders of
ConSil (collectively, "Registrable Securities") would materially
and adversely affect the success of such offering, then ConSil
shall not be required to register the Registrable Securities in
excess of the amount, if any, of the Registrable Securities which
the managing underwriter of such underwritten offering shall
reasonably and in good faith agree in writing to include in such
offering in excess of any amount to be registered for ConSil;
provided, however, that if any Registrable Securities are not
included for this reason, no shares of any other stockholders of
ConSil will be included in such Proposed Registration until such
time as all shares which Hecla may request shall have been included
in such Proposed Registration.
1.2. REGISTRATION PROCEDURES. If and whenever ConSil is under
an obligation pursuant to the provision of this paragraph 1 to
effect the registration of any shares, ConSil shall:
1.2.1. prepare and file with the United States
Securities and Exchange Commission (the "Commission") a
registration statement with respect to the shares;
1.2.2. prepare and file with the Commission such
amendments and supplements to such registration statements and
the prospectus used in connection therewith as may be
necessary to keep such registration statement effective and to
comply with the provisions of the Securities Act with respect
to the sale or other disposition of all shares covered by such
registration statement;
1.2.3. furnish to Hecla such number of copies of any
summary prospectus or other prospectus, including a
preliminary prospectus, in conformity with the requirements of
the Securities Act, and such other documents as Hecla may
reasonably request in order to facilitate the public sale or
other disposition of the shares;
1.2.4. use its best efforts to register or qualify the
shares covered by such registration statement under the
securities or blue sky laws of such jurisdictions as Hecla
shall reasonably request and do any and all other acts or
things which may be necessary or advisable to enable Hecla to
consummate the public sale or other disposition in such
jurisdictions of such shares; provided that ConSil shall in no
event be required to qualify to do business as a foreign
corporation or as a dealer in any jurisdiction where it is not
so qualified or to change the composition of its assets at the
time to conform with the securities or blue sky laws of such
jurisdiction, to take any action that would subject it to
service of process in suits other than those arising out of
the offer and sale of the Registrable Securities covered by
the registration statement or to subject itself to taxation in
any jurisdiction where it has not theretofore done so;
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1.2.5. if the Proposed Registration is a public
offering involving an underwriting, cause all shares covered
by each registration statement to be listed on a national
securities exchange or authorized to be quoted on the National
Association of Securities Dealers Automated Quotation System
("NASDAQ");
1.2.6. at any time when a prospectus relating to the
shares covered by such registration statement is required to
be delivered under the Securities Act, promptly notify Hecla
of the happening of any event as a result of which the
prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in
light of the circumstances then existing and, at the request
of Hecla, prepare, file and furnish to Hecla a reasonable
number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such shares, such prospectus
shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the
light of the circumstances then existing;
1.2.7. if ConSil has delivered preliminary or final
prospectuses to Hecla and after having done so the prospectus
is amended to comply with the requirements of the Securities
Act, ConSil shall promptly notify Hecla and, if requested,
Hecla shall immediately cease making offers of the shares and
return all prospectuses to ConSil. ConSil shall promptly
provide Hecla with revised prospectuses and, following receipt
of the revised prospectuses, Hecla shall be free to resume
making offers of the shares;
1.2.8. furnish, at the request of Hecla, on the date
any shares are delivered to the underwriters for sale in
connection with a registration pursuant to this schedule, if
such shares are being sold through underwriters, or, if such
shares are not being sold through underwriters, on the date
that the registration statement with respect thereto becomes
effective,
1.2.8.1. an opinion, dated such date, of the
counsel representing ConSil for the purposes of such
registration, in form and substance as is customarily
given to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and to Hecla and
1.2.8.2. a letter dated such date, from the
independent certified public accountants of ConSil, in
form and substance as is customarily given by independent
certified public accountants to underwriters in an
underwritten public offering, addressed to the
underwriters, if any, and Hecla; and
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1.2.9. before filing a registration statement or
prospectus or any amendments or supplements thereto with
respect to the shares, furnish to Hecla, its counsel and other
representatives, and the underwriters, if any, copies of all
such documents proposed to be filed, which documents shall be
made available on a timely basis for review and comment by
Hecla and any such underwriters. No references therein to
Hecla or the shares shall be made which have not been approved
in writing by Hecla.
1.2.10. give each of Hecla, its counsel, auditors and
other representatives and the underwriters, if any, access to
its books and records and opportunities to discuss the
business of ConSil with its officers and auditors as shall be
necessary in the opinion of Hecla, such underwriters and their
respective counsel, and to conduct all due diligence which
Hecla, such underwriters and their respective counsel may
reasonably require;
1.2.11. otherwise use its best efforts to comply with
the Securities Act, the Exchange Act, all applicable rules and
regulations of the Commission, and all applicable blue sky and
any other securities laws, rules and regulations which may be
applicable; and
1.2.12. if the Proposed Registration is an underwritten
public offering, provide a transfer agent and registrar for
the shares included in the Proposed Registration not later
than the closing date of the Proposed Registration.
1.3 COOPERATION BY HECLA. Hecla shall cooperate with ConSil
in connection with the preparation of the registration statement,
and for so long as ConSil is obligated to file and keep effective
the registration statement, shall timely provide ConSil, in
writing, for use in the registration statement, all such
information regarding Hecla and the shares as may be reasonably
necessary to enable ConSil to prepare the registration statement
and prospectus covering the shares to maintain the currency and
effectiveness thereof and otherwise to comply with all applicable
requirements of law in connection therewith.
1.4. LOCK-UP AGREEMENT. Hecla shall not, to the extent
requested in writing by ConSil and an underwriter of an offering of
shares of Common Stock (or securities convertible into or
exercisable or exchangeable for shares of Common Stock) of ConSil,
sell or otherwise transfer or dispose any shares not included in
such registration statement for 90 days following the effective
date of a registration statement filed by ConSil. In order to
enforce the foregoing covenant (and for no other purpose), ConSil
may impose stop-transfer instructions with respect to such excluded
shares until the end of such period.
1.5. EXPENSES. ConSil shall pay all expenses incurred by
ConSil and Hecla in complying with this paragraph 1, including,
without limitation, all registration and filing fees (including all
expenses incident to filing with the National Association of
Securities Dealers, Inc.), fees and expenses of complying with the
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securities laws of all such jurisdictions in which the shares are
proposed to be offered and sold, printing expenses, and fees and
disbursements of counsel and auditors representing ConSil and of
counsel representing Hecla; provided, however, that Hecla shall pay
all transfer taxes and brokerage and underwriters' discounts and
commissions attributable to the shares.
1.6. INDEMNIFICATION BY CONSIL. In the event of any
registration under the Securities Act of any shares pursuant to
this Schedule, ConSil shall, to the extent permitted by law,
indemnify and hold harmless Hecla, any underwriter, broker or
dealer who participates in the offering or sale of such shares,
Hecla's counsel, auditors and other representatives, each officer,
director, employee or agent of Hecla, and each other person, if
any, who controls any of the foregoing persons within the meaning
of Section 15 of the Securities Act, against any losses, costs,
claims, damages or liabilities, joint or several (or actions in
respect thereof) ("Losses"), incurred by or to which each such
indemnified party may become subject under the Securities Act, the
Exchange Act or otherwise, but only to the extent such Losses arise
out of or are based upon
1.6.1. any untrue statement or alleged untrue
statement of any material fact contained or incorporated by
reference, in any registration statement under which shares
were registered under the Securities Act, in any preliminary
prospectus or in any final prospectus, or in any post-
effective amendment or supplement thereto or any document
incorporated by reference into any of the foregoing (the
"Disclosure Documents"),
1.6.2. any omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements made therein not misleading,
or
1.6.3. any violation of any federal or state
securities laws or rules or regulations thereunder committed
by ConSil in connection with the performance of its
obligations under the Agreement; and ConSil will reimburse
immediately on demand each such indemnified party for all
legal or other expenses reasonably incurred by such party in
connection with investigating or defending any such Losses,
including any amounts paid in settlement of any litigation,
commenced or threatened; provided, however, that ConSil shall
not be liable to an indemnified party in any such case to the
extent that any such Losses arise out of or are based upon an
untrue statement or alleged untrue statement or omission or
alleged omission made in any such Disclosure Documents in
reliance upon and in conformity with written information
relating to such indemnified party furnished to ConSil by or
on behalf of such indemnified party specifically stating that
it is for use in the preparation thereof.
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2. CANADIAN PROSPECTUS.
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2.1. INCIDENTAL QUALIFICATION. If ConSil at any time proposes
to prepare and file a prospectus under any of the applicable
securities legislation of any of the provinces of Canada, as
amended (collectively, the "Securities Acts") for a distribution of
shares of its Common Stock, whether or not for sale for its own
account, ConSil will give prompt written notice to Hecla of its
intention to do so, describing such proposed distribution. Upon
the written request of Hecla delivered to ConSil within twenty (20)
days after the giving of any such notice (which request shall
specify the shares intended to be disposed of by Hecla and Hecla's
intended method of disposition (if not an underwritten offering),
ConSil will use its reasonable best efforts to effect the
qualification under the Securities Acts of the Provinces of Canada
in which ConSil proposes to make its distribution of the
distribution of all shares which ConSil has been so requested by
Hecla to qualify. If the distribution contemplated by ConSil is to
be made by or through one or more underwriters, ConSil shall cause
the managing underwriter to include the shares proposed to be
included therein to be included on the same terms and conditions as
any similar securities, if any, of ConSil included therein. Hecla
shall enter into the same underwriting agreement as shall ConSil
and the other selling security holders, if any, provided that such
underwriting agreement
2.1.1. contains
2.1.1.1. representations, warranties and agreements
on the part of the selling security holders that are not
substantially different from those customarily made by
selling security holders in underwriting agreements with
respect to secondary distributions and
2.1.1.2. representations, warranties and agreements
on the part of ConSil and such other terms and provisions
as are customarily contained in underwriting agreements
with respect to secondary distributions and
2.1.2. provides Hecla with an indemnification
substantially similar to the indemnification provided by
paragraph 1.6 hereof.
Notwithstanding the foregoing, if the lead underwriter of such
underwritten offering shall deliver a written opinion to ConSil,
with a copy to Hecla, that the distribution of any or all of the
shares, together with any other issued and outstanding shares of
Common Stock proposed to be included in the distribution, will
materially and adversely affect the distribution of such securities
by such underwriter (such opinion to state the reasons therefor),
then ConSil shall not be required to qualify the distribution of
shares in excess of the number, if any, of shares which such
underwriter shall reasonably and in good faith agree in writing to
include in such offering in excess of any amount to be registered
for ConSil; provided, however, that if any shares are not included
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for this reason, no shares of any other shareholders of ConSil will
be included in such proposed distribution until such time as all
shares which Hecla may request shall have been included in such
proposed distribution; and ConSil shall not be obligated to qualify
the distribution of shares under this subparagraph 2.1 incidental
to the qualification of a distribution of any of its securities in
connection with any acquisitions, mergers, amalgamations,
arrangements, reorganizations, securities exchange offers, dividend
reinvestment plans or stock option or other employee benefits
plans.
2.2. Procedures.
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2.2.1. If and whenever ConSil is required to effect
the qualification of any distribution of shares under any of
the Securities Acts as provided in subparagraph 2.1. hereof,
ConSil shall:
2.2.1.1. prepare and file in both the English and
French languages, as appropriate, a preliminary
prospectus or similar document in each of the provinces
of Canada in which ConSil proposes to make the
distribution and such other related documents as may be
necessary or appropriate relating to the proposed
distribution and shall, as soon as possible after any
comments of the securities commissions or similar
regulatory authorities of each of such provinces of
Canada (the "Commissions") have been satisfied with
respect thereto, prepare and file under the Securities
Acts of such provinces of Canada a final prospectus in
the English and French languages, as appropriate, and
shall take all other steps and proceedings that may be
necessary in order to qualify the shares for distribution
under the Securities Acts of such provinces of Canada by
registrants who comply with the relevant provisions of
those Securities Acts;
2.2.1.2. prepare and file with the Commissions such
amendments and supplements to the preliminary prospectus
and final prospectus as may be necessary to comply with
the provisions of the Securities Acts with respect to the
distribution of the shares and other securities covered
thereby until such time as all of the shares and other
securities have been disposed of in accordance with the
intended method of disposition by Hecla (and Hecla's
agents);
2.2.1.3. furnish to Hecla such number of commercial
copies of the preliminary prospectus and final prospectus
and of each amendment and supplement thereto (including
all documents incorporated therein by reference) and such
other relevant documents as Hecla may reasonably request;
2.2.1.4. furnish to Hecla:
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2.2.1.4.1. an opinion of counsel for ConSil
addressed to Hecla and dated the effective date of
the final prospectus and the closing date;
2.2.1.4.2. a "comfort" letter addressed to
the underwriter or underwriters dated each such date
signed by the auditors of ConSil; and
2.2.1.4.3. if translation into the French
language is required, an opinion of Quebec counsel
for ConSil addressed to Hecla and dated each such
date relating to the translation of the preliminary
prospectus and the final prospectus and, in each
case, covering substantially the same matters as are
customarily covered in such documents and such other
matters as Hecla may reasonably request;
2.2.1.5. promptly notify Hecla of the happening of
any event as a result of which the preliminary prospectus
or the final prospectus, as then in effect, would include
a misrepresentation (as defined in the Securities Act
(Ontario)) or an untrue statement of a material fact or
omit to state any material fact required to be stated
therein or necessary to make any statement therein not
misleading in the light of the circumstances in which it
was made, and at the request of Hecla prepare and furnish
to Hecla a reasonable number of commercial copies of a
supplement to or an amendment of the preliminary
prospectus and the final prospectus as may be necessary
so that, as thereafter delivered to purchasers of the
shares or other securities, such document shall not
include a misrepresentation or an untrue statement of a
material fact or omit to state a material fact required
to be stated therein or necessary to make any statement
therein not misleading in the light of the circumstances
in which it was made;
2.2.1.6. otherwise use its best efforts to comply
with all applicable Securities Acts and policies, rules
and regulations of the Commissions;
2.2.1.7. provide a transfer agent and registrar for
such securities not later than the closing date of the
offering; and
2.2.1.8. if the distribution is an underwritten
public offering, cause all shares covered by each
prospectus to be listed on a stock exchange in Canada or
authorized to be quoted on NASDAQ.
2.3. COOPERATION BY HECLA. Hecla shall cooperate with ConSil
in connection with the preparation of the preliminary and final
prospectus, shall provide ConSil, in writing, for use in the
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preliminary and final prospectus all such information regarding
Hecla and the shares as may be necessary to enable ConSil to
prepare the preliminary and final prospectus covering the shares
and otherwise to comply with all applicable requirements of law in
connection therewith.
2.4. LOCK-UP AGREEMENT. Hecla shall not, to the extent
requested in writing by ConSil and an underwriter of an offering of
shares of Common Stock (or securities convertible into or
exercisable or exchangeable for shares of Common Stock) of ConSil,
sell or otherwise transfer or dispose any shares for 90 days
following the date of the final prospectus filed by ConSil. In
order to enforce the foregoing covenant (and for no other purpose),
ConSil may impose stop-transfer instructions with respect to such
excluded shares until the end of such period.
2.5. EXPENSES. ConSil and Hecla will each pay their pro rata
share, based on their proportion of the number of shares offered
pursuant to a final prospectus, of all expenses incidental to such
offering including, without limitation, all filing fees, all fees
and expenses of complying with the Securities Acts, all printing
fees and expenses, all fees associated with translations of the
preliminary prospectus and the final prospectus, All fees and
disbursements of counsel to Hecla and its associates or affiliates
shall be paid by Hecla. All fees and disbursements of counsel and
auditors of ConSil shall be paid by ConSil.
2.6. PREPARATION; REASONABLE INVESTIGATION. In connection
with the preparation and filing of any preliminary prospectus,
final prospectus or similar document, ConSil will give Hecla and
the underwriters, if any, and their respective counsel, auditors
and other representatives, the opportunity to participate in the
preparation of such documents and each amendment thereof or
supplement thereto and such documents, amendments and supplements
will be made available on a timely basis for review and comment by
Hecla, its counsel, auditors and other representatives and the
underwriters, if any. No references therein to Hecla or the shares
shall be made which have not been approved in writing by Hecla.
ConSil will give each of Hecla, its counsel, auditors and other
representatives and the underwriters, if any, access to its books
and records and opportunities to discuss the business of ConSil
with its officers and auditors as shall be necessary in the opinion
of Hecla, such underwriters and their respective counsel, and to
conduct all due diligence which Hecla, such underwriters and their
respective counsel may reasonably require in order to conduct a
reasonable investigation for purposes of establishing a due
diligence defense as contemplated by the Securities acts and in
order to enable such underwriters to execute the certificate
required to be executed by them at the end of each such document.
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