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Exhibit 10.11
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT, dated as of November
8, 2006 (this " Amendment "), to the Existing Credit
Agreement (as defined below) is made by HECLA MINING COMPANY (to be
known as Hecla Limited following the Reorganization (as defined
below)), a Delaware corporation (the " Borrower "), the
Lenders (such capitalized term and other capitalized terms used in
this preamble and the recitals below to have the meanings set forth
in, or are defined by reference in, Article I below) and The
Bank of Nova Scotia, as the administrative agent (in such capacity,
the " Administrative Agent ") for the Lenders, and is
acknowledged and accepted by HECLA HOLDINGS INC. (to be known as
Hecla Mining Company following the Reorganization (as defined
below)), a Delaware corporation (" Holdings ").
W I T N E
S S E T H :
WHEREAS, the Borrower, the Lenders, the Administrative Agent,
and N M Rothschild & Sons Limited, as Technical Agent, are all
parties to the Credit Agreement, dated as of September 12, 2005 (as
amended or otherwise modified prior to the date hereof, the "
Existing Credit Agreement ", and as amended by this
Amendment and as the same may be further amended, supplemented,
amended and restated or otherwise modified from time to time, the "
Credit Agreement ");
WHEREAS, the Borrower has proposed a restructuring (the "
Proposed Restructuring ") of the capital structure of its
subsidiaries, whereby (i) the Borrower has created, and owns 100%
of the issued and outstanding Capital Securities of, Holdings, (ii)
Holdings has created, and owns 100% of the issued and outstanding
Capital Securities of, Hecla Merger Sub Inc., a Delaware
corporation and a newly formed, wholly owned Subsidiary of Holdings
(" Merger Sub "), (iii) pursuant to the Agreement and Plan
of Reorganization dated as of the date hereof (the "
Reorganization Agreement "), among the Borrower, Holdings
and Merger Sub, the Borrower will merge with and into Merger Sub,
with the Borrower being the surviving corporation and converting
its capital stock into the capital stock of Holdings (collectively,
the " Reorganization "), and as a result of the
Reorganization, the Borrower will become a Subsidiary of Holdings,
(iv) the Borrower will assign to Holdings, and Holdings will
assume, the employee benefit plans of the Borrower pursuant to an
Assignment and Assumption Agreement, dated as of the date hereof
(the " Assignment Agreement "), by and between the Borrower
and Holdings, in form and substance satisfactory to the
Administrative Agent, and (v) Holdings will guarantee the
Obligations; and
WHEREAS, the Borrower has requested that the Lenders amend
certain provisions of the Existing Credit Agreement such that the
Reorganization does not result in a Change in Control and amend
certain other provisions of the Existing Credit Agreement,
including amendments relating to the Proposed Restructuring, and
the Lenders are willing, on the terms and subject to the conditions
hereinafter set forth, to modify the Existing Credit Agreement as
set forth below;
NOW, THEREFORE, the parties hereto hereby
covenant and agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Definitions . The following terms
when used in this Amendment shall have the following meanings (such
meanings to be equally applicable to the singular and plural forms
thereof):
" Administrative Agent " is defined in the
preamble .
" Amendment " is defined in the preamble .
" Amendment Effective Date " is defined in Article
III .
" Assignment Agreement " is defined in the second
recital .
" Borrower " is defined in the preamble .
" Credit Agreement " is defined in the first
recital .
" Existing Credit Agreement " is defined in the first
recital .
" Holdings " is defined in the second recital
.
" Merger Sub " is defined in the second recital
.
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" Parent Guaranty " means the Parent Guaranty executed
and delivered by an Authorized Officer of Holdings pursuant to the
terms of this Amendment, in form and substance satisfactory to the
Administrative Agent, as amended, supplemented, amended and
restated or otherwise modified from time to time.
" Proposed Restructuring " is defined in the second
recital .
" Reorganization " is defined in the second
recital .
" Reorganization Agreement " is defined in the second
recital .
SECTION 1.2. Other Definitions . Terms for which meanings
are provided in the Existing Credit Agreement are, unless otherwise
defined herein or the context otherwise requires, used in this
Amendment with such meanings.
ARTICLE II
AMENDMENTS TO CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Amendment
Effective Date, the provisions of the Existing Credit Agreement
referred to below are hereby amended in accordance with this
Article II .
SECTION 2.1. Amendments to Article I . Article I of the
Existing Credit Agreement is hereby amended as follows:
SECTION 2.1.1. Amendments to Section 1.1 . Section 1.1 of
the Existing Credit Agreement is hereby amended by
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(a)
replacing each reference to "the Borrower" with
"Holdings" or "the Borrower’s" with "Holdings’", as the
case may be, appearing in each of the following definitions:
"Adjusted EBITDA", "Capital Expenditures", "Compliance
Certificate", "Current Liabilities", "Designated Preferred Stock",
"EBITDA", "Immaterial Subsidiary", "Interest Expense",
"Lender’s Environmental Liability", "Material Subsidiary",
"Multiemployer Plan", "Net Income", "Net Worth", "Pension Plan",
"Permitted Acquisition", "Redeemable Capital Securities",
"Restricted Payment", "Series B Preferred Stock", "Small Lot
Repurchase Agreement", and "Subsidiary"; and
(b) by
inserting the following definitions in the appropriate alphabetical
order in Section 1.1:
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" Holdings " means Hecla Holdings Inc. (to be known as
Hecla Mining Company following the Second Amendment Effective
Date), a Delaware corporation.
" Parent Guaranty " means the Parent Guaranty dated as of
the Second Amendment Effective Date, executed and delivered by an
Authorized Officer of Holdings, as amended, supplemented, amended
and restated or otherwise modified from time to time.
" Second Amendment Effective Date " means November 8,
2006.
SECTION 2.1.2. Further Amendments to Section 1.1 .
Section 1.1 of the Existing Credit Agreement is hereby further
amended as follows:
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" Change in Control " means
(a) the
failure of Holdings at any time to directly own beneficially and of
record on a fully diluted basis 100% of the outstanding Capital
Securities of the Borrower, such Capital Securities to be held free
and clear of all Liens (other than Liens permitted pursuant to
clause (a) of Section 7.2.3 ); or
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(b) the
failure of the Borrower at any time to directly own beneficially
and of record on a fully diluted basis 100% of the outstanding
Capital Securities of the Subsidiary Guarantor, such Capital
Securities to be held free and clear of all Liens (other than Liens
permitted pursuant to clause (a) of Section 7.2.3 );
or
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(c) 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
Holdings representing more than 50% of the issued and outstanding
Voting Securities of Holdings; or
(d) 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 Holdings (together with any
new directors whose election to such Board or whose nomination for
election by the stockholders of Holdings 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
Holdings then in office; or
(e) the
occurrence of any "Change of Control" (or similar term) under (and
as defined in) any Subordinated Debt Document or Designated
Preferred Stock Document.
" Current Assets " means the total assets which would
properly be classified in accordance with Section 1.4 as
consolidated current assets of Holdings and its Subsidiaries.
" Fixed Charge Coverage Ratio " means, at any time, the
ratio of:
(a) the sum, without duplication, of (i) Unrestricted Cash of
Holdings and its wholly-owned Subsidiaries as of the first day of
the period consisting of the most recently completed Fiscal Quarter
and the three immediately preceding Fiscal Quarters (e.g., in
determining the Fixed Charge Coverage Ratio as of December 31,
2006, Unrestricted Cash of Holdings and its wholly-owned
Subsidiaries as of January 1, 2006 would be included to this
clause (a)(i) ), (ii) the portion of the Loan Commitment
Amount not utilized as of the later of (A) such first day or (B)
the date of this Agreement, (iii) EBITDA for such period, (iv)
interest income paid in cash to Holdings and its wholly-owned
Subsidiaries during such period and (v) Net Equity/Subordinated
Debt Proceeds received by Holdings or the Borrower during such
period (provided that the aggregate amount of assets held by the
Borrower in Venezuela or by Subsidiaries of the Borrower organized
or operating in Venezuela that would otherwise be included in this
clause (a) shall not exceed $4,000,000 (it being understood that
the amount of EBITDA added pursuant to subclause (a)(iii)
shall not be subject to such limitation)),
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to
(b) the sum, without duplication, of (i) Interest Expense for
such period, (ii) scheduled principal repayments of Indebtedness
made during such period (including, and together with, payments of
Earn-Out Obligations during such period (other than payments made
with Capital Securities (other than Redeemable Capital Securities)
of Holdings), (iii) Capital Expenditures made during such period,
(iv) idle property expenditures for such period (including, and
together with, the aggregate amount expended by Holdings and its
Subsidiaries during such period with respect to any litigation,
labor controversy, arbitration or governmental investigation or
proceeding, including in respect of any judgment or settlement
relating thereto, less the amount of cash reserves set forth on the
December 31, 2004 consolidated balance sheet of the Borrower and
its Subsidiaries with respect to such expenditures), less any such
expenditures that were subtracted in the determination of EBITDA
for such period pursuant to clause (d) of the definition
thereof, (v) Restricted Payments made during such period (whether
or not permitted hereunder, but excluding Restricted Payments
permitted pursuant to clause (f) of Section
7.2.6 ) and (vi) the aggregate amount expended by the Borrower
and its Subsidiaries in cash during such period in respect of
Permitted Acquisitions (less the net cash proceeds of Capital
Securities or Indebtedness issued in substantially concurrent
transactions during such period for the purpose of financing such
Permitted Acquisitions).
" Net Equity/Subordinated Debt Proceeds " means, with
respect to (a) the sale or issuance after the Effective Date by the
Borrower (and after the Second Amendment Effective Date by
Holdings) of any 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
Borrower after the Effective Date (and of Holdings after the Second
Amendment Effective Date) or (b) the issuance after the Effective
Date by the Borrower of Subordinated Debt (and after the Second
Amendment Effective Date by Holdings), in each case to the extent
permitted hereunder, the excess of: (i) the gross cash proceeds
received by the Borrower (or Holdings as the case may be) from such
sale, exercise, issuance or contribution, over (ii) 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 Borrower (or Holdings as
the case may be) in connection therewith.
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" Senior Debt " means, at any time, the
outstanding principal amount of all Indebtedness of Holdings and
its Subsidiaries of the type referred to in clause (a) ,
clause (b) , clause (c) , 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 Holdings), 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, (ii) Subordinated Debt and (iii)
to the extent constituting Indebtedness, Designated Preferred
Stock, and any Contingent Liability in respect of any of the
foregoing.
" wholly owned Subsidiary " means, with respect to any
Person, any Subsidiary of such Person 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 such
Person.
(b) The
definitions of "Commitment Termination Event" is hereby amended by
deleting the words "with respect to the Borrower" appearing in
clause (a) thereof.
(c) The
definition of "Controlled Group" is hereby amended by replacing the
words "the Borrower" appearing in each case therein with the words
"Holdings and the Borrower".
(d) The
definition of "Immaterial Subsidiary" is hereby amended by amending
and restating the last sentence thereof in its entirety to read "In
no event shall the Borrower or the Subsidiary Guarantor be an
Immaterial Subsidiary."
(e) The
definition of "Impermissible Qualification" is hereby amended by
inserting the words "Holdings or" or "Holdings’ or"
immediately preceding the words "the Borrower" or "the
Borrower’s", respectively, appearing in each instance therein
other than in clause (d)(ii).
(f) The
definition of "Loan Documents" is hereby amended by inserting the
words "the Parent Guaranty," immediately after the words "each
Security Agreement," appearing therein.
(g) Each
of the definitions of "Material Adverse Effect" and "Subordinated
Debt" are hereby amended by r
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