SECOND AMENDED AND RESTATED CREDIT AGREEMENT

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

TABLE OF CONTENTS

 

 

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SCHEDULES AND EXHIBITS

 

 

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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);

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:

 

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